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Ask Ralph: Christian Finance
Nov. 6, 2024

Can Closing Credit Cards Actually Hurt Your Credit Score?

Can Closing Credit Cards Actually Hurt Your Credit Score?

What are 7 credit card debt myths that nobody should believe?

Do you feel like you're drowning in credit card myths that are doing more harm than good? In Episode 311 of the Ask Ralph Podcast, Ralph Estep Jr. delves into seven prevalent credit card myths that could lead you astray in managing debt effectively. He shares personal experiences and provides actionable steps to transform your financial future. Let’s dive into these debunked myths that will reshape your financial perspective and answer questions like, Can Closing Credit Cards Actually Hurt Your Credit Score?

Watch Here on Rumble

https://www.askralphpodcast.com/credit-card-myths/

Why Identify Credit Card Myths?

Credit card myths persistently influence poor financial decisions, leading to unnecessary debt. Ralph reveals stories of misguided financial management, including his own, to emphasize the importance of understanding these myths. Knowing the truth can save you from costly mistakes and provide a clearer path toward financial freedom.

Uncovering the Seven Myths

Ralph breaks down each myth:

  1. Carrying a Balance Builds Credit:
    • Reality: Only results in excess interest fees. Focus instead on timely payments and low credit utilization.
  2. Closing Unused Cards Improves Credit:
    • Reality: Reduces your available credit limit, raising your credit utilization ratio. Keeping cards open can maintain a better financial standing.
  3. Frequent Card Use is Necessary:
    • Reality: Overspending risks lurk with habitual use. Responsible usage and paying off monthly balances is key.
  4. More Cards Mean Better Credit:

Reality: Opening too many cards can flag risky behavior to lenders. Moderate, strategic card use is safer.

  1. Credit Card Debt is Good Debt:
    • Reality: High-interest rates make this debt detrimental. Use cards for rewards only if you can pay monthly.
  2. Perfect Payment History is Required:
    • Reality: Mistakes happen, but recent, consistent behavior most influences your score.
  3. Minimum Payments Are Sufficient:
    • Reality: Leads to long-term debt and greater cumulative interest. Aim to pay off full balances to avoid this trap.

How to Strengthen Your Financial Habits

Incorporating vigilance and method into credit usage can prevent debt spirals. Ralph suggests:

  • Pay Bills Timely: Consistency is crucial for maintaining trust with creditors.
  • Lower Credit Utilization: Strive for less than 30% utilization to bolster your credit score.
  • Strategize Business Credit Use: Monitor transactions and ensure cashflow supports timely payments.
  • Consider Debt Consolidation: It might help organize and reduce interest on multiple high-interest cards.

Key Takeaway: Myth-less Financial Management

Ralph’s advice? Dismiss myths and adopt informed financial habits for better performance and security. Protect your finances by implementing prudent strategies, and become part of a support community ready to guide you.

Conclusion: Aspire for Financial Mastery

Credit myths can cloud judgment but fuel wise practices through Ralph's insights to secure your future. For further understanding, connect with the Ask Ralph Podcast and embark on a journey to mastering your financial endeavors from a Christian perspective.

Websites/Resources mentioned:

https://www.askralphpodcast.com/payoff-credit-cards/

https://www.askralphpodcast.com/with-my-credit-card/

https://www.annualcreditreport.com/ 

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