Think about it logically: how can credit card companies research each and every household they plan to send an application to?(1)  The time they could spend on doing just that they’d rather spend on making mailing lists and sending as many applications as they can.  It is just like a more personal take on advertising.  The credit card companies just want you to be aware of the services that they are offering.  So when you get a handful of credit card applications from various banks, it does not mean that you can afford any of the deals they are offering.  Maybe you are even better off without a credit card at all.

Myth #2: Pay the minimum balance and you will be fine

If you are so confident about your credit card debt because you tend to zero in on how much the minimum payment is, you will end up in deep financial trouble.  Think about the balance that you left last month and then add up the balance you will leave this month because you are paying only the minimum.  Calculate the interest that will result in all those left-over balances and you know that you have gotten yourself deep under a pile of debt.  Not only that, think about the state your credit score will be in after all this: terrible, just terrible.(2)

Myth #3: Using a debt consolidation company is easy

You probably think that since you are deep in debt, there is no other way for you to pay everything off but by hiring the services of a debt consolidation company.  It won’t be easy, however.  There are many things that you should consider about a consolidation company.  Can you afford its service?  Remember that you are already deep in debt.  Is it a reliable company?  There are debt consolidation companies that operate under the radar; they cannot be trusted with your money.   Is it superior to your ability to pay off all your debts yourself?  Maybe, it is. However, if you have enough discipline to pay the company a certain amount, you can have enough discipline to consolidate your own debts.(3)

Myth #4: You only have one credit score

Having one credit score may be neat, especially for those with nice scores.  It may be a disaster if your score is a mess.  You actually have three credit scores from three main credit agencies.  Pray that your best-looking record will be referred to when your credit history gets checked out.(4)

Myth #5: You only need to cancel a credit card to improve your credit score

When you close a credit card account, you only give yourself a little bit more control over your finances.  You have fewer or no credit cards left after the cancellation.  However, closing the account will not improve your credit card score at all.  You also shorten your credit age, which is an important factor in your credit score.(4)

Myth #6: Your negative record remains in your credit score for seven years

Bad credit record does not have to stick around for seven years or for any other period of time.(5)  In fact, you can actually negotiate to have a record removed.(4)  One way to negotiate with creditors is, of course, by paying the debt.  You will just ask for the creditors to eliminate the record that states that you have been awfully late with your payments.  You do not even have to be completely paid to negotiate with your creditors; you can actually promise to pay them within a certain period of time.(6)

Myth #7: All three major credit bureaus will have identical reports

Refer to the debunking of the myth that says you have only one credit score.  The three companies do not have the same records. The reason for this?  Not all of your creditors get to report to every company.(7)  So, the more creditors you have, then the more likely your three reports are completely different from each other.

Myth #8: Credit cards are your little helpers

Credit cards may seem like free cash, especially at first.  However, they are also very expensive to maintain.(8)  Instead of paying for the retail price of a product, you end up paying not only the retail price but also the interest.  If you have not been able to pay all your balances every month, you will end up paying so much more.  To put things to the extreme end, credit cards cannot really offer a lot of positive things, except letting you buy things that you should not buy anyway.(9)  Most people have become so dependent on credit cards that one of the popular myths has arisen:  credit card makes you afford things and without it you cannot afford anything.  The truth is that you should not use your credit card to buy extremely expensive items in the first place: it would take a long time and heavy interest fees for them to get paid.

There are still a lot of credit-related myths out there.  Educate yourself about credit cards in general.  This way, you can debunk the remaining myths and keep away from credit mistakes that can drive you towards bankruptcy.  If you can manage your finances with cash, try to stick with it.  Remember the time when you applied for a credit card for emergency purposes?  Try to steer yourself back in time.

SOURCES:
(1)    http://myvesta.org.uk/pubs/20-greatest-myths-about-credit-debt
(2)    http://www.directlendingsolutions.com/myths_about_credit_debt.htm
(3)    http://www.creditcards.com/credit-card-news/8-myths-about-settling-credit-card-debt-1265.php
(4)    http://bettercreditblog.org/2008/09/10/6-most-common-credit-myths/
(5)    http://ratebox.com/tl/10-great-credit-myths-exposed/
(6)    http://bettercreditblog.org/2007/11/16/negotiating-with-creditors-to-get-negative-records-removed/
(7)    http://www.zeromillion.com/financial-services/common-credit-score-myths-by-gary-gresham.html
(8)    http://www.debteliminator101.com/credit-myths.php
(9)    http://www.daveramsey.com/the_truth_about/credit_card_debt_3478.html.cfm