Drawbacks of Closing a Credit Card Account

Escaping from the pressures of significant personal debt can be an overwhelming task that may even seem completely impossible. As an individual begins to make headway in this daunting effort, identifying any sign of improvement can be greatly rewarding. One accomplishment that is likely to become a milestone of some importance is the payment in full of an outstanding credit card balance. Seeing a zero dollar balance on a statement or letter can lead to a momentary rush of excitement, and it should. But although the temptation may be to close the account, this can do more harm than good.

If you are currently struggling to make timely payments for your existing financial obligations and the difficulties are starting to wear upon you, then we can help you to determine whether seeking bankruptcy protection might offer some relief. Contact the Arizona bankruptcy lawyers of the Harmon Law Office, L.L.C., at 480-829-0494 to discuss your situation with a skilled and experienced attorney.

How Closing an Account Can Hurt

It seems like the natural thing to do when an account has been paid in full would be to close it. After all, you are attempting to put a negative financial episode behind you, and there is little that could be more symbolically powerful than closing the account. Unfortunately, because of the way that credit scores are calculated, this can pull your credit score down. This is how that happens:

• Credit scores take into account the length of account histories, so closing an older account may shorten the length of your record
• The available credit balance will be reduced, increasing the ratio of balance to credit limit, another important component of calculating your score
• Keeping the account open allows you the opportunity to make regular on-time payments, and this can be essential to rebuilding your credit score

Contact Us

We understand the challenges you are grappling with because we have been helping our clients overcome similar struggles for years. To learn how we can help you, contact the Arizona bankruptcy lawyers of the Harmon Law Office, L.L.C., at 480-829-0494.