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When You Should Not Close a Credit Card

Many clients make the common mistake of closing a credit account when it has become almost not payable. These customers are usually led by the belief that they will better their condition. However, if they apply this tactic they will end up in a worse situation, because it will appear as a negative event on their credit report.

There are several occasions when you don't have to close a credit card. One of them is when there is still a balance on the credit card. If you overlook this advice and still close such a credit card you will end up with a lower total credit available. Your credit score may be negatively influenced if a maxed out credit appears on it. Closing a credit card that is still balanced leaves the impression of a maxed out credit.

It is also not recommended to close your one and only credit card. You could get additional credit score points when the credit card is kept in the mix. However, if you close it, you will also end up with no credit card, which may be needed in emergent situations. What is more, you will not be viewed with a good eye by a future potential creditor since you have closed your only one credit card.

Your credit history will be made shorter if you decide to close the old credit card you hold. This means that creditors will view your tendency of holding a credit card is inconsistent, while they prefer borrowers with stable, longer credit histories.

You should also avoid closing cards that have advantageous terms. It is always advisable to keep a credit card that has low interest rates, doesn't charge an annual fee or any other good characteristic. Additionally, it is always better to be charged less for a purchase than being charged more.

So, if you really need to close a credit card, select the one you have opened most recently and which is out of use but make sure it doesn't have a balance.

Finally, remember that closing a credit card does not raise your credit score. It will not erase your credit history with this particular card and it can hurt your credit rating under certain circumstances such as those listed above. Therefore, do think twice before deciding to close a credit card.

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