Why You Should Think Twice About Cancelling That Credit Card
November 16, 2016
Credit history makes up a solid 15% of your credit score. The 15% is weighed on how long your accounts have been open, and how long it has been since you have been using those accounts (AKA, are they active?). To create a solid history, credit bureaus would prefer a minimum of six months under your belt.
Therefore, before you close a credit card account, research whether or not this will affect your credit history. If you’ve had one card for 10 years, and another for 5, your best option would be to close the 5 year account as it holds less credit history.
Did you know that as of just last year, 56% of us hockey lovers had never even checked our credit score! And only 14% of us check it regularly. So high five for being financially savvy (and wanting to improve your credit score).
Anyways, back to business.
Let’s tune in on how to build your credit history. For those of you who are in need of a further history, there are two easy ways to establish credit:
- Apply for a credit card
- Get a co-signer
By making small purchases and keeping consistent payments, you can effortlessly build a strong credit score. As the saying goes “The best credit, is old credit”.
But what about rebuilding?
Maintaining an active but responsibly managed account, line of credit, or loan (from a cool company like Borrowell) is a great way to continue rebuilding.
Keep up the seriously amazing work by following these couple of steps, and before you know it, you’ll be ready to take on your next financial goal.
- Bring all accounts up to date. If you are unable to make a full payment at once, now is the chance to contact your creditors and negotiate (like we worked on last week!). Ensure that when you contact your creditors you are honest with your situation. Make a payment plan that is ideal for both you and the lender.
- Take care of any bills gone to collections first. After you reviewed your credit report, you would have been able to see any late payments, but one thing to keep in mind is that bills gone to collections will appear on your public records section. Once paid, ask the agency to update this on the credit bureau as soon as possible.
As you know, your credit score depends heavily on payments made on time, which is why we keep telling you to pay off current debts, and encourage you to set up automatic payments to avoid future delinquencies.
Although – you’ve already started doing those things, right? We thought so.
Creating a credit history takes time. By maintaining regular payments, following our weekly steps, and being aware of your score, you are now on your way to building a great one.