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I have found that I have too much revolving credit. What should I do?
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| I have found that I have too much revolving credit. What should I do? |
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| Updated |
Jun 10, 2004 21:48:58 |
| Rating |
 16 ( -2 -12.5% ) |
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Description:
Closing excess or unused revolving credit accounts (e.g., credit cards or home equity lines where you have a "credit limit" to draw upon rather than a fixed loan amount) is a great thing to do for your credit rating. Because having a lot of revolving credit available means that you could get yourself much deeper into debt than you are now simply by going out and charging a lot of purchases, many credit grantors, as well as the statistical models that generate credit scores, treat too much available credit as a negative.
There are a couple of precautions you should take when closing a credit account. One is to make your request in writing and ask for a written confirmation, so that you can document the closure of your account. The other is to request that the credit card company or bank report the closure to the credit bureaus as "closed at consumer's request" so that there can be no question about why the account was closed.
If you know you have too much revolving credit available, but for some reason can't identify an account that you could easily close (e.g., you want to keep a card for some unique benefit, even though you only use it occasionally), you can also request that one or more of your credit grantors reduce the credit limit on your account(s) in order to lessen the amount of unused credit you have available.
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