Person holding a credit card while working on a laptop

Myth Busted: You Don't Need to Carry a Balance to Build Credit

The Myth

Ever wanted to buy a house or car, but worried about getting a good loan? Or maybe you just want the best deals on credit cards or insurance. That's where good credit comes in! It helps you unlock these financial goals and more.

Here's the thing: some folks believe you need to carry a balance on your credit card to build good credit. Not true! In fact, carrying a balance can actually hurt your chances of getting good credit.

Why carrying a balance isn't the answer:

  • Credit Card Bill Blues: Interest charges add up fast! The more you carry a balance, the more you pay in interest, which can be a waste of money.

  • Temptation Trap: It's easy to spend more than you can afford if you keep a balance on your card. This can lead to debt and hurt your credit score.

  • Credit Score Secret: A big factor in your credit score is called credit utilization. Keeping your balance low (ideally below 30% of your limit) shows responsible credit usage and helps your score.

So, how do you build good credit without carrying a balance?

  • Pay It Off Each Month: Use your credit card for everyday purchases you usually make with cash, but pay the entire balance off each month. This way, you avoid interest charges and show responsible credit use.

  • Set Up Payment Reminders: Ditch late fees forever by setting up automatic payments for at least the minimum amount due on your credit card.  If you can, try to pay more than the minimum to keep your credit utilization low.

  • Become a Credit Card Authorized User: Know someone with good credit? Ask them to add you as an authorized user on their card. This lets you benefit from their positive credit history without needing your own card.

Build Credit With Us

Central Willamette Credit Union is here to help you on your journey to building good credit. We offer a variety of credit card options with low introductory rates and rewards programs to fit your spending habits. Additionally, our friendly and knowledgeable staff can answer your questions and help you choose the right credit card product to establish a positive credit history. If you have questions please text or call: (541) 928-4536visit a branch, or send us a message today!