||Ask Dr. Don
Getting a lower interest rate
Dear Dr. Don,
I had poor credit many years ago due to divorce. I lived for many
years without any credit cards.
Five years ago I was able to get a credit card with
a rate of 19.7 percent. Since then I've gotten five more cards with
interest rates from 14 percent to 16 percent. I have a good payment
history. I would like to try to combine my credit cards to maybe
two lower-rate cards, but where do I start?
Thank you for any advice!
Since negative information stays on your credit report for seven
years, you should be well on your way to rebuilding your credit
history. You can find the current averages for credit card rates
on Bankrate's Credit
Card Channel. My point is that the interest rates on your current
credit cards aren't awful, so don't concentrate on chasing lower
Closing out your current cards to consolidate balances
on new cards may not be in your best interest because it can lower
your credit score. According to MyFICO.com, "... consumers
with longer credit histories have better repayment risk than those
with shorter credit histories."
That site also suggests that, "Avoiding
a sudden ramp-up of new credit openings will help you continue receiving
positive points for this area of consideration by the FICO score."
Talk with your current card companies about
increasing your credit limits and lowering your interest rates.
Move balances from your higher interest cards to lower interest
cards, either with a balance transfer or by how you manage your
credit card use and payments.
Congratulations on turning your credit history
-- Posted: Aug. 15, 2002