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Trading up credit cards

Dr. Don TaylorDear Dr. Don,
I am trying to improve my credit rating and get better credit cards. I have had two credit cards for seven to eight years. They are high interest (18 percent to 24 percent). I have recently received a third credit card at 15-percent interest. When applying for credit cards with better terms, should I drop the old cards so that I don't have too much available credit, or should I keep them because of the age of the accounts?
-- David Debt-Terms

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Dear David,
Keep the old cards. The age of the accounts helps your credit score. So does reducing the ratio of credit used to credit available, but continuing to apply for additional credit cards can actually hurt your credit score.

Odds are you don't need better credit cards; you just need your existing credit cards to be at a better interest rate. Improve your credit score and you'll have the leverage you need to negotiate with the credit card companies to get a lower interest rate. Then, if they balk at reducing your interest rate, you can vote with your feet and open a new account with another firm. Start out by paying down your balances over time. You'll be amazed at how this will improve your credit score.

Bankrate's Credit Scoring section will help you explore the topic in greater depth. Don't miss the FICO® Score Estimator, brought to you through a partnership between Bankrate and MyFICO.com.

 

 
-- Posted: Nov. 2, 2004
     

 

 
 

 

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