Myth #1--          Credit Cards Advertising “No Preset Limit” Promise Unlimited Spending

These cards may offer “unlimited spending,” but all credit cards have a limit. However, certain high-end cards may let customers exceed their credit limit, based on customer history.

Credit card spending limits are determined by two factors: 

- Your income 
- Your spending patterns

Visit http://www.cardratings.com to easily compare and rate many credit cards.

Myth #2--          The Rate on Your Credit Card Will Not Go Up Unless You Are Late with Payments

Credit card companies can change interest rates on cards at any time, with 15 days notice. It does not matter whether you are a habitually late payer, make your payments on time, or exceed your credit limit.

During the last few years, rates crept up on many credit cards as credit tightened. From the credit card company perspective, strategies like raising interest rates (as well as cutting back on mail credit solicitation and cutting back on generous offers for balance transfers) may be less dramatic (and less noticeable) than closing accounts or refusing to open accounts.

Myth #3--          Your Credit Score Will Suffer if You Have High Limits on Your Credit Cards

Your credit limits on your cards are based on what you make, as well as your spending pattern with the cards.

Trying to lower your credit limit might actually hurt your credit score. Likewise, closing accounts with high limits, or opening several new accounts, can impact your credit score.

If you want to help your credit score: 

- Use discretion in applying for new cards, and do not overdo it.  
- If you have an older account with a high credit limit, keep that account open.

Myth #4--          You Can Stop Credit Card Junk Mail by Sending It Back to the Sender

It costs credit card companies more to remove you from mailing lists than to spend money on unsolicited advertising.

Stop credit card junk mail by: 

- Calling 1-888-5-OPT-OUT 
- Opt out online at http://www.OptOutPreScreen.com

Particularly troublesome are credit card “convenience checks,” which your own credit card companies send to you and which can be stolen in the mail. See MSN Money for a good article on these convenience checks and your rights regarding them.

Myth #5--          Your Credit Score Will Improve if You Close Credit Card Accounts

Closing credit card accounts can actually hurt your credit rating. Your credit score takes the following items into consideration: 

- The credit you have available 
- How much of that credit you are using 
- The difference between these two

If you close credit cards, it looks as if you are using a bigger piece of your available credit.

Additionally, your credit score looks at the age and length of your credit history. If you close accounts, particularly older accounts, this can make your credit history appear shorter than it actually is.

For more information on how your credit score (FICO) is calculated, see http://www.myfico.com/crediteducation/whatsinyourscore.aspx.

Good strategies toward improving your credit score are: 

- Pay credit card balances on time 
- Eliminate your debt over time 
- Use discretion when applying for new credit, and do not overdo it 

Myth #6--          Your Credit Rating Consists of Other Scores, in Addition to the FICO Score

The FICO number is the only number that comprises your credit rating. The three credit bureaus (TransUnion, Equifax, and Experian) may each give you a slightly different FICO, since the data that each bureau collects on your credit history may vary slightly.

The comprehensive way to receive all three of your FICO scores is to go to http://www.myfico.com.

Credit reports may be received from any of the three bureaus at: 

- http://www.experian.com 
- http://www.transunion.com 
- http://equifax.com

Make sure you correct any errors in your credit reports, as these can impact your FICO score.

Myth #7--          Merchants Are Required to Ask for Identification When You Use Your Credit Card

Merchants are not required to ask for your ID with a credit card purchase. In fact, some credit card companies discourage merchants for asking for ID in these transactions.

Similarly, your card must be signed on the back. Writing “Ask for Identification” in the signature area of your card will not validate the card.

Myth #8--          Checking Your FICO Score Will Hurt Your Credit Rating

You may check your FICO score or your credit reports at any time, without impacting your credit rating. What will impact your credit score is opening new accounts. Do so carefully and only if needed.

Myth #9--          A High Income Means a High Credit Rating

Income and credit rating are not related. What gives you a good credit rating is a good credit history (i.e., debts paid on time) and a desirable balance of available credit to actual debt.

Myth #10--        Using Your Debit Card Will Help Boost Your Credit Rating