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Why you should beware of debts and credit you don’t use

Admin Manager - Wednesday, August 30, 2017

It is easy today to apply for a store credit card that you forget all about in a few years – but that account will remain on your credit report and affect your credit score as long as it remains open. Having credit lines and credit cards you don’t need makes you seem like a worse credit risk because you run the risk of “overextending” your credit.

Having many accounts you don’t use increases the odds that you will forget about an old account and stop making payments on it - resulting in a lowered credit score.  Keep only your used accounts and make sure that all other accounts are closed. Owning fewer accounts will make it easier for you to keep track of your debts and will increase the chances of you having a good credit score.

However, you must keep in mind that when you close an account, the record of it remains on your credit report and can affect your credit score for a while. In fact, closing unused credit accounts may actually cause your credit score to drop in the short term, as you will have higher credit balances spread out over a smaller overall credit account base.

For example, if your unused accounts amounted to $2000 and you owe $1000 on accounts that you have now (let’s say on two credit cards that total $2000) you have gone from using one fourth of your credit ($1000 owed on a possible $4000 you could have borrowed) to using one half of your credit (you owe $1000 from a possible $2000). This will actually cause your credit risk rating to drop. In the long term, though, not having extra temptation to charge and not having credit you don’t need can work for you.

I will take a free look over your credit report! Don’t have one? Order yours today: >>>Order Today!<<<

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