Understanding how credit can help and hurt you is key to your financial future. There are four myths about credit that I would like to dispel.

It's better to have lots of credit than not enough.

This can only lead to trouble. Most people only need two credit cards. You should have one card you use for convenience purchases. You should pay this card off at the end of every month so you don't pay finance charges. Your second card should be for the larger purchases you need to make. This card should have the lowest interest rate you can find.

If I have credit I can have everything.

No - if you have good credit and money you can have everything. There's always a catch. You can be turned down for loans because you have too much credit. Make sure you don't have a lot of open accounts that you don't use, as this can be used against you and you won't be able to get anything you want.

I don't need to worry about the balance on my credit cards as long as I pay the minimum each month.

Don't let yourself get into this habit. Let's say you have a $2000 balance on a card with 18% a year. You will be paying $30 a month in finance charges. If your minimum amount due is $50, it will take you over 8 years to pay it off, that's if you don't charge anything else on the card, ever.

My lender wouldn't have approved the loan if I couldn't afford it.

Yea - they're really looking out for you. Would you believe some lenders actually want to approve people that are at risk for not being able to repay them? It's true! They know they can take your car or your home or whatever you signed over as collateral. There's a chance they'll actually come out further ahead that way and so they're willing to risk having you on board.