Credit cards can empower people when used correctly, enabling consumers to access credit, ease cash flow problems, and make the most of the perks on offer. Several myths remain, though, including that to have an outstanding balance on a card will help build credit - this is not the case.
Carrying any outstanding balance on a credit card does not improve credit scores but can have a negative effect and bring it down. This is because credit ratings often take into account the ratio between the maximum limit of credit available and the current debt. The less money outstanding on a card, the larger the credit utilization ratio, and so the better the credit score.
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