“Leave Unused Credit Card Open,” Says Un-common Sense

Posted by morecollegeoptions | Posted in Education | Posted on 15-07-2016

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It’s common knowledge to open a card, get the perks, use it, pay it off and close that account ASAP or it’ll hurt your credit. That’s intuitive. That makes sense.

WRONG-GO, This Time It’s UN-Common Sense For Your Win

It’s counter-intuitive how the credit system actually works. DO NOT CLOSE UNUSED CARDS! Why??

#1 – The length of credit history matters. As an 18 year-old you’ll get lots of credit card offers in the mail. In their self-interest, hoping you will spend the maximum and spend years paying down the accruing interest and balance. Maybe you’ll miss a payment and the interest rate can go from reasonable to astronomical, which means so high you are trapped. The credit card companies is like the band Trapt in their hit Headstrong” saying this to you:credit cards

“Back off I’ll take you on
Headstrong to take on anyone
I know that you are wrong
Headstrong we’re Headstrong
Back off I’ll take you on
Headstrong to take on anyone
I know that you are wrong
This is not where you belong
I can’t give everything away
I won’t give everything away”
Love, Credit Card Companies

We At Higher Education Assistance Can Give Everything Away. It’s For The Sake Of Your Education On Credit Cards, After All!

DO NOT CLOSE OLD CREDIT CARDS. Leave them open with a $0.00 balance. Why else?!
#2 – This will lengthen your OPEN line of credit. If you have 10,000 credit line with 3,000 balance total on the cards then you have the IDEAL ratio of closed to open lines of credit, which is 30%. Anywhere from 0-30% spent (closed) credit is considered good and gets you those points on the score. When you close a card you shorten your line, you increase your percentage.
We’ve even known people to OPEN new cards after figuring out their ration of open to closed lines of credit. If you know your credit card LIMIT just take a second for some basic math. Add up the amount you COULD spend on each card…now that’s the bottom of the fraction (denominator). Now add up how much you OWE on each card. That’s the top number in the fraction (numerator). Now divide your faction and you have the decimal for a fraction. If it’s .4, you have used 40% of your credit line. Aim for 30%.
If you have higher than .3 then do this math! It’s easy, hang in there. DIVIDE your credit card debt by .3. You will get your magic number. That’s the amount of credit you still need.
Apply for a new card with a line of credit with that amount. Sometimes you cannot request the exact amount but sometimes you can. Try this credit card.

The post “Leave Unused Credit Card Open,” Says Un-common Sense appeared first on Higher Education Assistance.

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