| How to Borrow Money, Part 7 |
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If you've had trouble paying off credit cards in the past, you may be tempted to return your card to the credit card company along with a few not-too-well-chosen words. But closing out accounts may negatively affect your credit, since the credit agencies consider the ratio of total debts to total available credit. So keep the paid-off card while remembering that there's no law that says you have to use it. In fact, the best way to retaliate against the credit card company is to not use the card. They don't collect any fees from the establishments that accept your card, and they don't collect any interest off you. If you eventually want to close out some charge accounts, do it slowly, starting with the most recently acquired accounts. You should keep your older accounts open because they show that you have a longer credit history. Special note to those with a particularly checkered credit history. If you have had some severe problems in the past, perhaps including loan charge-offs or bankruptcy, don't despair. (If you had to file for personal bankruptcy, you're not alone. In the past decade, more than one out of every ten U.S. households went bankrupt.) You can reestablish your credit faster than you probably think. If you can't qualify for a traditional credit card, obtain a secured credit card. A secured credit card works just like a regular credit card except that any balances you run are secured by a deposit you have made with the credit card company. Also, open a savings account at your bank or credit union to demonstrate that you're working toward a better financial future and to show potential lenders that you've got some money set aside to pay off future obligations. |
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