 Changing
cards can hurt credit score
|  Dear
Dr. Don,
I am divorced, retired and living on a pension
and Social Security. I have some debt on very-low-interest credit
cards (0 percent, 2.9 percent) that I convert to other cards, when
the promotional rates expire. This has significantly lowered my credit
score. Should I refinance my home? -- Joan Card-Jumper
 Dear
Joan,
You can rebuild your credit score. Refinancing
your home to pay down your credit cards isn't likely to be a good
idea for someone that is living on her pension and Social Security
income. That's because you're converting unsecured debts to secured
mortgage debt. That means you're betting the house that you'll be
able to make these payments.
Hopping from one credit card promotion to another
has an effect on your credit score, because every time you apply
for credit with one of these promotions it generates a credit inquiry
on your credit report. That inquiry stays on your credit report
for two years.
What you do with the credit cards you don't use anymore
also makes a difference in your credit score. The age of your account
relationships makes a difference, so if you're closing out the old
cards, your current creditors don't have a long payment history.
Keep the accounts open, however, and you have a credit-capacity
issue. This is a bit of a double-edged sword. Lenders like to see
that you're not maxed out on your available credit lines, but they
also have to be concerned if you have a large amount of credit already
available to you and their card just adds to the pile.
You haven't discussed your monthly budget, or
the size of your credit card balances, but you need to make it your
goal to pay down these credit card balances, rather than restructuring
your debt or waiting for the next low interest offer.
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