- Personal Finance»
- Managing Credit Cards & Payment Options
During challenging times the questions about credit and what to do when it becomes unmanageable increases.
Credit and credit scores has become a vital part of our daily living. It affects insurance rates, mortgage interest, auto loans and sometimes even employment.
We will just touch on a few basic questions concerning credit and debt. Using credit wisely and what happens if you don't is a discussion for another time.
Q - If I get a credit card and then never use it, is that good or bad for my credit rating?
A - the credit limit on the card may be factored in (even if you haven't used the account and have a zero balance) when a new lender tries to establish your credit risk. They may see that you have an open account and could theoretically charge things to that account that would then decrease your ability to pay back any other new debts. If you're applying for a home loan and you're trying to maximize what you can qualify for, you may want to close any open, unused accounts before applying for a home loan so they don't show.
Q - To get a better credit score do you close old credit cards that I do not use?
A - Closing old CC with a good history hurts your rating even if you don't use them. A factor that may make it ok to close older cards is if the outstanding available credit is hurting your debt ratio, then choose the newest to close.
Q - Does APPLYING for too many credit cards damage your credit?
A - Your credit score is based on several factors. The one you are asking about is not based on the number of cards, but the amount of credit that's available for you to use.
Q - If you have really good credit and you foreclose on a house does it destroy your entire credit or is it best to file bankruptcy instead of foreclosure?
A - Any interruption in payments will affect credit score. Bankruptcy will have longest effect, foreclosure next and short sale a bit less. If you end up in foreclosure or short sale be sure the uncollected balance is not collectible. If so, then you might consider bankruptcy for protection.
Out of Control Credit
It's not hard to allow credit to get out of control. There are many reasons, some good and some bad, it still becomes a problem.
The worse thing you can do is do nothing. There is a ton of information for you to sort through, this will take some effort on your part to read it.
It's not easy to admit your in trouble, especially if you've always been a good payer. The quicker you get over this hump the better off you will be.
Ignoring a problem like this won't make it go away, in fact the debt will swell because of late payments and increased interest charges. Take action before this happens.
Find more information concerning debt issues visit the Debt Hub, take the first step to understanding what you can do if debt has become a problem for you.