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To improve Credit Scores: is it better to pay off Credit cards or pay down, thus leaving a line of credit open |
To improve Credit Scores: is it better to pay off Credit cards or pay down, thus leaving a line of credit open it really depends on your credit. If, for example, your credit cards have high interest rates, I would pay them off and keep the lowest interest rates. If you have horrible credit, lots of late payments or are over the limit, I'd get rid of all of them but one and work on rebuilding your credit with only one card. (the lowest APR card of course!) The more cards and the more credit limit you have the worse it can be when banks and such look at your credit (they see it as you have a high risk of debt). Either way, do not close the account once your balance is settled. The credit showing as extended to you (but not used) will show that you are responsible and will improve your score. it is best to completely pay off the credit cards but DO NOT close them. Keep the credit line open and available for as long as possible. Credit scores are based on length of time and credit available, so keep the balances down (or even better zero) and your limit high. personal experience with credit cards and scores. There is some good info here. http://www.repair-your-credit.jims-info.... You want to demonstrate responsible prudent financial behavior. If you have ten cards, close eight. If you only have two, keep them open and only use them to pay current bills and pay them promptly and don't incur credit charges. Call your credit union and ask their advice. If you don't belong to a credit union, join one. Today they are not limited to certain memberships. Nearly anyone can find one to join. They offer great advantages. |
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