Credits cards and credit scores Ken Strey

Even if you don’t want to use a credit card anymore, you need to consider the impact on your credit.  If this card has a high credit limit and you close it, it will have a negative impact on your score.

 

The goal is to have the ratio of your balances to credit limits below 30 percent.  By closing the account, you could increase the proportion of your available credit you are using.

 

For example, you owe $10,000 on three credit cards and the credit limit or the maximum amount you can charge on all three is $50,000. You have used 20 percent of your available credit ($10,000/$50,000=.2 x 100 is 20%).  If you close one credit card with a credit limit of $10,000, you have now lowered your available credit to $40,000 ($50,000 – $10,000).  You have used 25 percent of your credit limit now based on owing $10,000 with $40,000 credit limit ($10,000/$40,000=.25 x100 is 25%).

 

It is better for your credit to keep the card open and use it every six months to keep it active. Only charge a small amount and pay it off in full as soon as the bill arrives.  This keeps the amount of credit used low and keeps your credit score high.

 

Scorewell, Inc. is a Full Service Credit Repair and Credit Education company producing expedited industry leading results.

 

Would you like to set up a time to look at your credit profile ?

 

Regards,

 

Ken Strey

 

Scorewell, Inc

 

Phone : (925) 478-5213 Fax : (925) 226-1883   kenstrey@scorewellinc.com

 

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