Should I close my credit card accounts?
After going through the debt consolidation loan process, many people are relieved to learn that their old debts have been paid off. As soon as these debts disappear, however, these same people are surprised to learn that the accounts are still open. In the case of credit cards, this means that it is possible to accumulate new debt. Closing the accounts, however, can have consequences. That’s why it is important to make sure that you are making the right decision when it comes to closing credit card accounts.
After having your credit card accounts paid off, it is important to realize that the accounts are still open. That means it is still possible to make charges on all of the credit cards that are included in a debt consolidation loan. Of course, no one wants to run up their credit cards after going through the debt consolidation process. On the other hand, it can be a bad idea to live your life without any access to credit.
If you close the credit card accounts, it will mean that there is no way to make purchases with the card. In the case of an emergency, this could be a problem. In fact, many people choose to leave one or two accounts open, but put the cards in a safe place where they are only accessible in the case of an emergency.
<p data-sp-element=”content”>Closing accounts can also have an effect on your credit score. If you close credit cards that you have had for years, it is possible that your credit history will become shorter. The accounts are closed, and that causes them to drop off of a credit report. A short credit history can lower a credit score by several points. More recent accounts, however, tend to have a negligible effect on a credit score when they are closed. Because these accounts do not shorten the length of a person’s credit history, they won’t lower a credit score when they are removed.<p data-sp-element=”content”>On the other hand, closing accounts will reduce the amount of available credit on a credit report. That can harm a credit score significantly if the amount of credit available is significantly reduced. Since none of the credit is being used, however, it is possible that the effect on your credit score will not be that great.