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How Should I Handle My Credit
to Prepare for the Future? |
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Eliminate Excess Unused Credit
Just as a high number of inquiries suggests you may be overextending
yourself, a lot of available credit means you have the capability to
overextend yourself in the future, even if you have not done so in the
past.
Although people may perceive having several credit cards with high
limits a sign that they have good credit, too much of this good thing
can make them seem like a poorer credit risk.
The lender needs to be reasonably sure that you will continue to be able
to repay your debt in the future. But if you have thousands of dollars
of unused credit available, you might spend it all the month after your
loan goes through and suddenly have more debt than you can pay off.
To prevent this concern from arising, you should close unused credit
accounts before applying for a large loan, and/or consider having your
credit limits reduced. If you do either of these things, make sure to
ask the creditors to record that the account was closed or changed at the
consumer's request--you don't want anyone to get the impression the bank
closed the account because of problems with your payment habits.
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Related Links
Is it Possible for a Person to Have Too Much Credit?
Why is Having Too Much Revolving Credit a Bad Thing?
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