Top 3 Reasons you might want to keep your credit cards open.
With the recent problem with the economy many people have paid off their credit cards never to return to that crutch again.
Others have paid off their debt and want the option that if need be they have access to “cash”.
There are three reasons you might want to consider keeping your credit cards open.
The number one reason for keeping your credit cards active is that it shows you are capable of keeping multiple lines of credit open. It also shows that you can maintain them successfully.
The second reason to keep your credit cards open is so that if an emergency arises you will have the money instantly available.
For instance none of us expects a flood or something that comes out of nowhere to affect us. As we see on the TV almost daily these things can and do happen.
Creditors can see you have multiple lines of revolving credit and that you are maintaining them properly i.e. paying them on time etc. That can also enable you to get a higher line of credit if that emergency does pop up.
The third reason you may want to consider keeping multiple lines of credit open is that it shows well on your credit report. That is as long as you have no late fees or have missed any payments.
The rule of thumb is if you haven’t used the card in 6 months then close it.
I knew a friend of ours years ago who paid cash for everything. He even paid cash for his cars. Although they weren’t brand new he had a way of finding some great deals so he wouldn’t have a car payment.
When he went to purchase a house he couldn’t. Why? He hadn’t built up any credit!
The banks didn’t care that he had no debt. They didn’t care that he paid cash. What they cared about was that he had no credit history.
My friend has thought he would have no problem getting a loan but he was wrong.
When you decide to keep your credit cards be careful using them. Have in mind the thought that when you make a purchase the following month you will pay it off.
Never have too many credit cards open because that looks like you have too much outstanding credit.
The danger is the more you credit you have available the greater your chance of using it. You need to be responsible.
If you feel it’s too tempting then you need to do what’s best for you.
Going in to debt when it comes to your business is never a good idea.
One of my other friends kept her credit cards in her freezer. She felt in they were in there she was less likely to use them.
Life has enough stress without adding undo credit card debt
Do you exercise restraint when it comes to credit cards?
Leave your thoughts and comments below.
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Be Savvy And Successful!
Toni Nelson – Business Coach