{"id":5874,"date":"2014-01-09T23:04:22","date_gmt":"2013-09-12T19:42:09","guid":{"rendered":"https:\/\/creditrepairnewyork.net\/?p=5874"},"modified":"2014-01-09T23:04:22","modified_gmt":"2014-01-09T23:04:22","slug":"think-twice-before-closing-a-credit-card","status":"publish","type":"post","link":"https:\/\/creditrepairnewyork.net\/think-twice-before-closing-a-credit-card\/","title":{"rendered":"Think Twice Before Closing a Credit Card"},"content":{"rendered":"

You should think twice before closing a credit card<\/strong><\/span><\/h1>\n

 <\/p>\n

\"credit\"Many people have adopted a frugal lifestyle lately to help
\nthem adjust to today\u2019s difficult economic conditions. They\u2019ve trimmed their budget,
\nadjusted their spending, and taken steps to maximize their earnings. In order to avoid
\nthe temptation to overspend, some have opted to close their old or unused credit cards<\/strong><\/span>.
\nAlthough this seems like a logical approach,closing credit cards<\/strong> <\/span>can actually have a negative
\naffect on your credit score.<\/strong><\/span>Regardless of an account\u2019s status, whether
\npositive or negative, closing that account can cause a score to drop. That typically
\nhappens when there\u2019s an increase in the percentage of available credit in use. That
\nmeasure is an important factor in today\u2019s economic climate.<\/p>\n

Let\u2019s take a look at an\u00a0example.Joe Consumer has 4 <\/span>credit cards<\/strong><\/span>, each with<\/span>
\na $4,000 limit. <\/em><\/h2>\n

That means Joe has a totalof $16,000 in available credit. Joe has zero
\nbalances on two of the cards, but he owes a total of $4,800 on the other two. That means
\nhe\u2019s currently using 30% of his available credit<\/strong><\/span><\/a> – that\u2019s the $16,000 in available
\ncredit, divided by the $4,800 he owes. Joe feels that 30% is a bit high, and he may have
\na point. Someone advises him to close the two cards that have no balances.
\nAt first, this doesn\u2019t appear to be a bad idea. Joe wasn\u2019t using the cards in the
\nfirst place, but he\u2019s going to discover that closing the cards will have an unintended
\neffect on his credit profile<\/strong><\/span>. When Joe closes the two accounts, he reduces his available
\ncredit to just $8,000. Though he\u2019s less at risk to incur any debt beyond his comfort
\nlevel, he also may have jeopardized his ability to secure financing that may be necessary
\nfor any other goals he has. Remember, Joe had outstanding balances totaling $4,800.
\nWhen you divide his available credit by the total amount he owes, the percentage of credit
\nJoe is using skyrockets to 60%. This increase can be a red flag to lenders, so Joe may want
\nto rethink his strategy.Even if he decides not to close his cards,
\nhis bank may decide to do so for him. With today\u2019s economic challenges, banks are routinely
\nadjusting their exposure to risk. Some banks have reduced their clients\u2019 credit lines,<\/strong><\/span>
\nwhile others have closed accounts that have been inactive for some time. Either of these
\nscenarios may adversely affect the percentage of credit in use.
\n\"creditFurther complicating matters is the age of the card someone chooses to close. The amount
\nof time an account has been open is a factor in credit scores<\/strong><\/span>. A longer, positive history
\nis beneficial to credit scores<\/strong><\/span>; therefore,closing an older account that\u2019s in good
\nshape could impact your score significantly.It\u2019s difficult to predict precisely how
\nmuch this will affect your score. That\u2019sbecause the scoring formula weighs everything
\nin a person’s credit history<\/strong><\/span> in relation to each other, at a given moment. So, for one
\nperson, closing an older account can represent a higher risk than it does for another person,
\nsimply because of the unique nature of their overall credit report.<\/strong><\/span>
\nIf you absolutely want to close a card, or if you\u2019ve discovered that your creditor
\nhas already done so, there are a few things you want to do. First, if the account is still
\nopen, break out the calculator and determinethe effect that closing the account will have
\non your percentage use of available credit<\/strong><\/span><\/a>. Next, check your credit report<\/strong> <\/span>to ensure that
\nthe accounts have been marked as closed and to determine whether there are any errors.<\/p>\n

Also, destroy your canceled credit cards<\/strong><\/span> to prevent someone else from stealing them and
\nattempting to reopen the account.<\/h3>\n

Well, that\u2019s it for this edition. As always,
\nwe welcome your feedback and ask for your thoughts and suggestions by e-mailing us at
\nCreditRepairNewYork@yahoo.com. Thank you for reading. Until next time, I\u2019m Thomas
\nFelix for Credit Repair New York<\/strong><\/span>.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

You should think twice before closing a credit card   Many people have adopted a frugal lifestyle lately to help them adjust to today\u2019s difficult economic conditions. They\u2019ve trimmed their budget, adjusted their spending, and taken steps to maximize their earnings. In order to avoid the temptation to overspend, some have opted to close their… Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[32,34,33],"_links":{"self":[{"href":"https:\/\/creditrepairnewyork.net\/wp-json\/wp\/v2\/posts\/5874"}],"collection":[{"href":"https:\/\/creditrepairnewyork.net\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/creditrepairnewyork.net\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/creditrepairnewyork.net\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/creditrepairnewyork.net\/wp-json\/wp\/v2\/comments?post=5874"}],"version-history":[{"count":4,"href":"https:\/\/creditrepairnewyork.net\/wp-json\/wp\/v2\/posts\/5874\/revisions"}],"predecessor-version":[{"id":5890,"href":"https:\/\/creditrepairnewyork.net\/wp-json\/wp\/v2\/posts\/5874\/revisions\/5890"}],"wp:attachment":[{"href":"https:\/\/creditrepairnewyork.net\/wp-json\/wp\/v2\/media?parent=5874"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/creditrepairnewyork.net\/wp-json\/wp\/v2\/categories?post=5874"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/creditrepairnewyork.net\/wp-json\/wp\/v2\/tags?post=5874"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}