You know which one it is, your favorite credit card, shiny but worn a little from lots of use. Oh, you might have many others, but for some reason you always pull out this particular one. Is it the art, the style of font, the bright or subdued colors ? Maybe it is because it is the only one that hasn’t lowered your credit limit down to your debt line.
Now is the time to stop playing favorites, show a little love to all of your cards. Even if it is buying just a pair of shoes. Credit is just that CREDIT. That is how the banks make money is you USING credit. IF you don’t USE credit, then the banks see no reason to keep your account open. It is bad, when creditors close your account. Really bad, when credit bureaus tally up points creating your credit score.
So pull the stack out of the drawer and see IF they are still alive, and what is available on each of them, use them at least every three to six months.. Use them or lose them ! Obviously, having a credit card canceled hampers your access to credit. But what happens is far more damaging. Your credit limit is lowered and that messes with your debt to credit ratio. You will appear incapable of managing your financial affairs. Your interest rates will be raised because now you are seen as a risk to your creditors. It is a snowball forming and will hit you upside the head when you least expect it or want it.
Don’t be a victim of the games the banks are playing. Stay knowledgeable. To maintain your debt to credit ratio you must always be doing the math ! Ideally you’d use less than 10% of your limit. But 20% can be acceptable if you are making timely payments. But when you go over the 20% line you are in the CAUTION ZONE. 30% is the cliff- STOP ! Going over 30% appears you are maxed out. You are in danger of your entire credit world crumbling down around your ankles.
Quick fix before your score drops is to apply for another credit card, preferably with a high credit limit and DO NOT USE IT except to show activity. The whole reason for the card is to give you breathing room, expanding your overall credit limit, to align your debt to credit ratio. It is NOT meant for you to use to expand your debt load. Be smart ! 422
Spectrum Resources offers counseling in issues of debt, credit and home ownership, including prevention of foreclosure. Our mission is to provide education and resources giving you options to explore. Call 863-967-0660, email: SpectrumResources@tampabay.rr.com Don’t forget to visit all our blogs to learn more: