Building And Maintaining A Good Credit Score–Consumers Told To Avoid Closing Accounts But Is A Little Debt Helpful?

Aspects of building and maintaining a good credit score can be complex and may require that consumers heavily research not only options available for their specific position but general bad credit repair practices. However, what some consumers overlook is closing credit card accounts or allowing a credit cards history to go stale could also have adverse effects on a consumer’s score. What we need to focus on though is exactly what type of damage a consumer will be looking at and whether this will particularly factor into a consumer’s long-term financial goals.

The starting point for rebuilding a bad credit score, which has been covered in depth, is usually reviewing one’s credit history, but when it comes to actually paying off debts and erasing obligations on various credit cards, some consumers feel that when they close out a credit card account they are doing themselves a favor by taking away any temptation or opportunity to acquire more debt. This, according to many financial advisers, can be a step in the wrong direction as it will hurt a consumer’s credit utilization ratio, but even this aspect of bad credit repair is something that most consumers will understand.

What some men and women don’t take into account is that if they have multiple lines of credit open, and relatively low debt, this can bode well for their credit score but some cardholders have simply put their credit cards away and have only kept one line of credit active. According to officials at FICO, this practice could cause a decrease in a consumer’s score as well, but it may not be significant enough to impact a particular consumer’s bad credit repair process in a negative way.

It’s been stated that if a cardholder doesn’t use a particular credit card or has relatively small amounts of credit activity they may see their credit score drop rather than those who make charges and pay off their balance. Yet this is where many consumers must make a personal decision as to whether they will use these cards directly throughout the month or over a period of weeks to make necessary payments, but pay off these debts in full, as carrying a balance will obviously lead to higher overall costs, even if they are minimal.

There are consumers who have simply taken a hit to their credit score and closed out multiple credit card accounts, but this again will be a personal decision that a consumer must make.  However being informed as to what drawbacks may be seen from these activities is necessary so that an informed decision can be made. Essentially, if keeping a credit card or multiple credit cards open is a consumer’s goal, advisers say that keeping a balance on one or more of these cards, but in an affordable range that can be paid off, could be more beneficial than simply letting card sit unused, but of course this could only lead to a minor decrease in a consumer’s score versus closing out credit card accounts or allowing credit card debt to run amok and, eventually, lead to missed payments.