Posts Tagged ‘coosa valley credit union’
Coosa Valley Federal Credit Union
Free Credit Consolidation Minimize Unintentional Damage to your Scores
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Free credit consolidation and what you need to know and what you can do to minimize unintentional damage to your scores: It would be great if there were a secret formula to restore the damage done by intentionally moving balances from credit card to another or opening new accounts. Unfortunately until the credit bureaux’s straighten things out there are only a few things you can do: 1) Continuing to pay down debt and try holding off on opening any new accounts. 2) Attempt to keep the balances low on your credit products. |
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3) Don’t transfer your problems! Obviously this is a hit or miss scenario. If you happen to come across a really good and low interest rate when you’re paying off a high rate or during a free credit consolidation, then it may well be in your best interest to transfer your balance as the money you save could be put to good use by paying off even more of the outstanding balance. Keep in mind the effect it will have, yes a lower rate is better when you’re paying off your debt, but when you take advantage of a balance transfer you may damage your credit scores.
Take a look:
Here is insightful advice from Don Sainechuck at the Coosa Valley Federal Credit Union: By simply opening a credit card or other product account it can lower your overall credit score by 5 points (some times more). This includes a balance transfer to a card with a lower rate and debt consolidation.
We ask Equifax and the Community America Credit union, this is what they said: “because the FICO model is heavily influenced by your "credit utilization ratio," the portion of your available credit limit you’re actually using. The formula likes to see a wide gap between your balances and your limits. Transferring a balance from a high-limit card to a lower-limit card makes it look like you’re closer to maxing out that second card and the scores can react negatively on your report on credit.”
So in short: FICO’s formula would, in general, prefer a balance of a $1,000 dollars on 5 cards over a balance of $5,000 on one card. Make sense??? Not!
To top it off, if you do transfer the balance from card to another, don’t close the other card (it will actually do more damage). By closing the old account it lowers the available amount of credit that FICO uses the personal credit scoring formula.
So to summarise:
1) Try to limit opening new credit accounts.
2) Don’t transfer your balances from card to card.
3) Pay off/down your balance and debt or apply for a free credit consolidation. If you do take advantage of a lower interest card make certain you use the opportunity to reduce the balance, after all, less debt is good for your wallet as well as your credit scores.
Before making any credit or financial move you should consult with a Veridian personal banker at the Langley Federal Credit Union. If you would like more infomation see out other posts and Shell Credit
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