This credit card myth could be keeping you in debt!

Support @ Women with CentsBlog, Debt

This week I am turning myth-buster to answer a question that I received from the Women with Cents community:

“We currently have a credit card debt of around $2,800 and it’s the only debt we have. We are hoping to buy a home in the next couple of years and since all our big purchases have been paid in cash we have very little good credit, or credit history at all. My question is, once I have paid off the credit debt are we better off getting rid of the card or using it to pay for expenses (that I can pay back straight away from savings) to build rapport with the bank?”

To be honest, I personally think that this idea of ‘having credit to build credit’ is a myth!

While this may be the way things work in other countries, such as America, in Australia it is more likely that the reverse is true. Having multiple credit cards and multiple enquiries on your credit file in a short period of time is more likely to have a negative effect on your credit score than not having a credit card at all.

When sizing you up for a home loan, the banks are generally more interested in your ability to repay debt and your overall credit score – which takes into account more than just your credit cards: saving accounts, utilities, phone/internet services all go towards building your credit score so you don’t need a credit card purely for that purpose.

Your rent repayment history, saving history, size of your deposit, income, employment and residential history (how often you change jobs and how often you move (unless it’s required for work)) are all further factors that can impact whether or not you can get a loan. The banks will look at the whole picture, not just whether or not you have a credit card.

So, in answer to your question.

If it were me, I would get a copy of my credit report so that I know what is on it, and I would get rid of the card – it’s a temptation that could very well lead you back into debt! 

How healthy is YOUR credit score?

If you would like to know more about how credit scoring works, what is on your credit report, and how to get your hands on a free copy – read my blog here.

Hop on over and join our Women with Cents facebook group and share what you found! Did you discover any mistakes? Were you surprised by your score?


Need a helping hand?

Whether you need help with a home loan, getting on top of your spending or just have some money questions – I’d be happy to help. Just click below to get in touch.


The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.

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