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How will closing my credit card affect my credit rating

Asked over 3 years ago - Vincennes, IN

I want to pay my debt and not file for bankruptcy. It is my debt so I feel that I should pay it....but...the interest rates on my cards are killing me. I cannot get ahead. I have tried calling my cardholders and they have not been willing to reduct the interest rate. One company will reduce the interest rate, but close the account and set up payments. Will this hurt my credit rating or is this a good option. Thank you

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Attorney answers (2)

Gabriel Cheong

Reputation Level 15

Answered over 3 years ago. Divorce / Separation Lawyer in Quincy, MA.

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Note that I am not licensed to practice in your state.

Closing the card and setting up a payment plan will hurt your credit score because you're closing the line of credit and your history down. Hoewver, if you're in debt up to your eyeballs, this might be the only solution for you. Take a little ding in your score in an effort to pay off the debt that is rightfully yours. It's the right thing to do and it's admirable.

Also, look into opening up 0% or low interest balance transfer credit cards to transfer high interest credit cards over to. If the credit card companies won't lower your interest rate, then switch to another company.

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Lu Ann Trevino

Reputation Level 17

Answered over 3 years ago. Debt / Lending Agreements Lawyer in Houston, TX.

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Why do you care what your credit rating is? If you file bankruptcy it's shot for at least ten years. If you don't file bankruptcy, your credit rating will be damaged for 7 years after the last activity on the credit cards, good or bad. If your credit debt is that high, you won't be able to get a loan for other purchases because your debt to income ratio is too high.

You could try surfing the balances to cards with lower interest rates, if you miss a payment you are very likely to get the punishment rate which will make your debt greater faster.

Or you could check out Dave Ramsey for a radical strategy.

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