Top 5 Reasons to Avoid Bankruptcy in Illinois and Opt for Debt Settlement Using Benveniste Law Offices
Managing debt is something that just about everyone has to deal with. Whether it’s deciding what account to pay down first, how much to pay, or calculating how long it’ll take to get your balance to $0, how to handle consumer debt is always a consideration. So much so that once you finally achieve your goal of paying it off, the only thing you may want to do is close the account.
This must be the smartest thing to do, right? Many finance experts would beg to differ. Although your credit account may have brought on loads of unnecessary stress, there are a few compelling reasons as to why you should keep your credit account open after paying it off..
Benefits of Keeping Credit Accounts Open
Paying off your balance is an incredible accomplishment. No matter if you had your account open for a couple of months or several years, there are few more rewarding feelings than knowing that you have one less stressor to worry about. Now that the hard part is behind you, it is vital that it is reflected positively on your credit report.
It may be hard to believe, but closing your account may hurt your credit score, especially if it is your only credit account. Lenders want to look at your credit report and see that you are a trustworthy applicant. By having little to no lines of credit open — even if you paid them off — it is difficult for them to gauge your reliability.
Your goal should not be to pay off your debts and close all accounts, but rather to have a diverse range of credit on your report. This can include car payments, mortgages, credit cards, and other accounts that require monthly payments. The more accounts you have open in good standing, the better. Your low credit utilization rate will attest to your ability to efficiently manage funds and make it much easier to secure major loans.
Credit Utilization Rate
Calculating your credit utilization rate is simple. Just take your total balance and divide it by your credit limits to get your utilization rate. Let’s say you have two credit cards open and your total balance for both is $2,350 and your total credit limit is $8,000. Your credit utilization rate is just below 30%. This is considered to be an ideal rate; the lower it is, the better it looks on your credit report.
Paying your balances down may be your goal, but it often entails more than simply making on-time payments. Seek the legal counsel of an Illinois debt relief attorney with Benveniste Law Offices who can help you lower and even eliminate your current credit card balance. Heather Benveniste is a knowledgeable attorney who understands how to negotiate with creditors to the benefit of her clients. Contact us today for a free case evaluation.
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