Do Americans understand the ins and outs of credit? They should. After all, they have enough of it. A 2015 NerdWallet study found that the average U.S. household with debt carries $15,310 in credit card debt and $132,086 in total debt.
Financial advisors come across many misunderstandings.
"I consistently see people with a lot of confusion surrounding credit and building a positive credit score," said Jason Reiman, certified financial planner and owner of Get Financially Fit. "The biggest issue I see is people mistakenly thinking they have to have so many different types of credit in order to improve their scores."
Reiman recommends clients have one major credit card, paid in full each month. He uses a diagram from MyFico.com to help them understand the factors that contribute the most to developing a positive score.