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Reducing Your "Potential Debt" By
Eliminating Unused Credit Accounts |
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It's a good idea to close unused credit accounts, because having too much available
credit can lower your credit rating. The issue isn't so much the number of cards you
have as it is the total credit line that these accounts add up to-or as creditors refer
to it, your "potential debt."
When lenders consider giving you a loan (particularly a large one like a mortgage),
one of the factors they have to weigh into their decision is how much available credit
you have. This is because you could, in theory, max out all those credit lines after
they give you the loan and therefore become unable to repay all of your debt. So,
reducing the amount of unused credit you have to only what you really need is usually
a wise decision.
If you've lost track of your open accounts, the fastest way to identify them is to get
a copy of your credit report. It will list your open accounts. And, if you need addresses
for some account issuers, the credit bureau will be able to help you with that information.
Considering the fact that all creditors do not report to all the same credit bureaus,
it can be helpful to get a copy of your report from each of the three bureaus to do the
most complete open-account search.
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