Being Organized Can Affect Your Credit
I am doing something this week that I used to do at least twice a year. I have not done it since I had kids.
I am writing letters to credit card companies whose cards we no longer use and have a zero balance to CLOSE THEM! In our case too many open revolving credit accounts was negatively affecting our credit rating!
We recently turned in our leased vehicle. While we were closing the deal on our new van we were joking around about our credit ratings and whether mine was higher than my husband’s etc. Well, she told us that with the ‘new law’ (whatever law that is in Michigan) she could tell us our own scores. Â
Mine (mid/high 700’s) was higher than my husband and the last time we checked his had been higher. We quickly put two and two together and realized that he had taken over the ‘Moving Balance Card’ (this is the card that has zero percent interest for a certain time - we move our balance as soon as the introductory rate goes up) and it was affecting his credit. The finance woman also said that she could give us a print out of both our credit reports. Sweet!
With FREE reports in hand I am now ready to get organized and send form letters to all accounts that need closing. If you’d like to use my form letter to close your accounts just contact me and I’ll send it to you.
Whoa whoa careful on closing those accounts dear! As someone who has been a mortgage banker for 17 years I can tell you that closing out credit accounts will cause your credit score to go down.
What could be negatively affecting your credit score is any accounts you have with balances and the percentage you owe compared to your limit. For example. Let’s say your credit limit on a Visa is 1,000 dollars and your current balance is 900 dollars, you are at 90% of your limit and this will reduce your credit rating. Creditors like to see all accounts below 60% of your limits.
New vehicle purchases negatively affect your credit because the loan that appears on your credit report starts out at 100% of the approved limit.
A great website that explains all this is:
http://dadsandgrads.about.com/od/aftergraduation/a/CreditScoreABC.htm
Hope this helps,
Catherine, the redhead