Do I Have to Go Into Debt to Build Credit?

Debt Build Credit

You may have heard a rumor that you have to take on debt in order to build up credit. This is among the most common myths surrounding credit cards today. It is simply not true that you must continuously carry credit card balances and have debt in order to improve your credit score. In fact the opposite can be the case. 

Keeping a credit card balance that is excessively high will harm your personal credit score.

The best way to appropriately take advantage of your credit card to build up good credit is to charge items with the credit card, pay the entire balance every month (even better twice per months), and so build up a solid credit score without needing to get into debt. The key to doing this is for you to exercise discipline in not running up a balance that you can not pay down when the bill comes. 

If you do carry a balance, work towards keeping the total debt to less than 30 percent of your available total credit. Any amount over this ratio will harm your credit score under the component of credit card usage, which accounts for 30 percent of your possible credit score. 

Exceeding 30 percent (and especially going over 50 percent) will significantly reduce the amount of points you receive in this important credit scoring category.

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