Credit Card Cancelations and Credit Scores
There is a train of thought out there that says that you should
never cancel your credit cards. They say that you have built up
a credit history with these cards and if you remove them you are
removing that history. However, those credit cards and their
history are going to stay on your credit for seven years anyway
– so it isn’t like you are taking away from your credit. Experts
now say that it makes more sense to cancel the credit cards
except for possibly one or two that you use often and that you
pay on time consistently.
But if you have a lot of credit cards and they have a good
history and you get a debt consolidation loan just to pay them
off, you have just drastically increased your debt to income
ratio which makes you look like you are basically stockpiling
credit. There are many better ways of handling your debt, and
this is not the way. Instead, if you get a debt consolidation
loan, you want to pay off all of your credit cards and then
cancel those that do not have the longest good credit history.
Now you still have the same amount of debt, and your possible
debt to credit ratio is changed for the better.
You can use these debt consolidation loans to pay down your debt
in a more timely manner, but they do not have to wreck your
credit in the process. If you already have bad credit, you might
want to pay on those poor credit rating cards for a little while
to show that you can pay them on time and change that rating to
a positive instead of a negative.
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