Tip #7 – Closing accounts…
In my last post I talked about the kinds of credit card accounts you need to have on your credit file so you can have what I like to call, “credit diversity”. Just like diversifying your stock portfolio. Same concept. You need to mix things up so it looks as if you know what you’re doing with managing your credit.
I want you to understand that credit can help you accomplish a lot of things, again, if managed properly. While consumer credit card companies are very well aware, that in our consumption economy not everyone will manage their credit the way it needs to be managed, you can be the intelligent one that understand how to use “the system” to your advantage.
When I talk about using credit, I’m speaking to those that are looking to use credit to aid in their business or most likely with Real Estate. When it comes to purchasing an automobile, it’s not as difficult as a lot of banks have relaxed their lending standards. You may still need a credit restoration, and for that I would suggest you reach out to me for assistance.
Now, for todays tip. When you close credit accounts it isn’t necessarily a good thing, contrary to conventional wisdom. Maintaining your credit accounts looks favorable and it also helps to keep the amount of available credit spread out. In a previous post I talked about “utilization”, or the amount of credit that you use. When you close an account your utilization can go up because you’ve eliminated a credit account. The key here is to always keep an ample amount of credit on hand!
PROBLEM: You have credit card accounts you want to close and you are unsure if you should.
SOLUTION: If you have available credit limits on good cards, with a good history, and you think the interest rate is too high for instance, you may want to consolidate the cards instead of closing them. The key here is to maintain and KEEP all of your credit card accounts. If you feel that the minimum monthly payments are becoming too much I would suggest paying the cards down, or paying them off, or as I’ve said consolidating with a different credit card with a lower interest rate.
2015 CREDIT RESTORATION PROGRAM
If you are interested in our Credit Restoration Program where we consult our clients on restoring their credit profiles to align with their personal and professional goals email me now at dean@deancantave.com with the subject line, “Credit Coaching/Consulting Services” to schedule a 30-minute consultation. I want to START you off on the right foot in 2015!
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