Do Not Get Rid Of Your Credit Cards
February 10, 2009
Some people will not be looking forward to their next credit card statement coming through again with the reminder of what was actually spent on them over the festive period. They may be so depressed with the amount on them that they may just cut them up so that no more can be spent but according to credit information provider, Equifax, consumers should not be too tasty in doing so.
Equifax External Affairs Director, Neil Munroe said “A natural instinct when getting to the point of facing too much debt, especially on credit cards after the Christmas spending spree, is to cut them up”. He adds “But whilst it’s important to stop using credit when you’re already struggling to manage repayments, we do advise that consumers don’t cut up all their cards.”
He continued “Obviously it’s important to try to get financial matters straight first. But once they have achieved this they may want to use credit in a responsible way to support their finances in the future. If they have had a record of debts and defaults then they will find that new applications may not be accepted, especially as lenders are now operating much tighter criteria when assessing new customer applications.”
“Indeed, in a recent survey* conducted amongst customers of our Credit Reports and Ratings, nearly a third of respondents said they had been refused credit in the last 6 -9 months. 26% thought the reason they were refused was because they had a poor credit rating with 10% saying they thought they didn’t fit the lending criteria. So our advice is to stop using credit cards and do everything possible to pay off outstanding balances. But don’t cut them all up.”
Getting credit from lenders is becoming ever more difficult in the current climate so the message from Equifax is stand up and tackle your financial woes and do not give up.
Mr Munroe warns though “Credit cards are a costly way to pay for essentials if the bill isn’t paid off in full at the end of each month, but we do acknowledge that having access to credit could be useful in the future and that’s why we are advising that consumers don’t cut up all their cards.”
“It’s also crucial not to forget any cards on which there are outstanding balances – any overdue payments will be shown on an individual’s credit file and will be taken into account by lenders when new applications are made. It’s worth consumers getting a copy of their latest credit report to make sure no cards are forgotten. To make this as easy as possible, we have launched a new service which gives them access to their Equifax Credit Report for 30 days for free.”
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