Closing the Credit Card is not the Solution to Improve Credit Score

Are you working on to pay your own debt, or you don’t use any credit cards, try to solve this issue might seem like the best solution. Just not using any credit card is often detrimental as it charges for this non activity account fees. Although considering your present financial situation you may think of closing some card which is beneficial but it definitely has some long term disadvantage.

Tricky calculation

 Almost 40 % of your credit score is been calculated the amount of credit you are using at any given time considering your total credit availability. Your credit worthiness calculates points depending on using your credit value or the ratio of available credit and remaining debt on that credit card. To make your credit score most impressive, you should only use 40 % of your available credit capacity. At this situation if your carrying other credit card which are totally in very bad shape, it need to pay out lot of money to bring your balance, it will affect your present credit although you have good score in one of your credit card.

History effect present

 Again the other 15 % of credit score depends on your history of using a particular credit card for certain periods.  A good record for long time is extremely essential as it will support your nature of repaying back money in timely fashion. Closing an earlier acclaim account acclaim cards will delete all your records of repayment history. If for past few years you have maintain well balance credit availability in this card and suddenly for few months you are not able to repay the minimal payment, it’s always a good idea to keep this credit card active. Closing this credit will cause severe bad effect on your credit score in both ways.

Controllable credit

 If you’re thinking to apply   a home loan, car loan or any kind of bog loan, the financial institution will look at your credit score, to decide whether you have the capacity to repay the mortgage amount every month and then they will calculate the interest for the loan. If you are having two credit cards among which one is almost used and very little credit available, then they will score your financial situation not so good. In that case they will take less favorable decision to sanction your loan or they will charge you very high interest which is really taxing your own financial condition.

Loosing points

There are few  credit cards are offering advantageous programs, where  they reward customers by earning points , which can be easily redeemed in the basic utility like, travel, gas, hotel, restaurants or shopping. If you are little conservative you can use them tactfully for very good cause. If you are taking any of this card payment lightly, it is always a best option to repay the minimum balance and don’t lose that credit card which genuinely offer benefits for living

Unforeseen cause

There are few situations where it is extremely important to have few credit cards. This credit card can help you to swing through this situation. Entertaining guests, paying for car repair or medical bills or certain need of travel are those situations where credit card is extremely beneficial.