Read This Before Canceling A Credit Card

Today we caution our savvy readers to think twice before you go and close down a credit card. According to all three credit bureaus, credit scores are influenced by accounts that are seasoned (i.e., greater than two years old). If you choose to close these types of seasoned accounts, it may negatively impact your credit score either directly or indirectly.

For example, even if closing a credit card has no direct effect on your score, it can affect your debt utilization ratio significantly. When your debt uitilization ration increases significantly after removing the closed account from your credit bureau report, your credit scores will drop. Keep in mind that you do not get free credit scores this way.

Scores must be paid for one way or another; either purchased directly from the bureaus or by starting a free trial of a credit monitoring service which is available to consumers of financial services. 0 balance will usually be deleted from your credit bureau reports after 10 years. If a closed credit card account is currently reporting a zero credit limit, the card will not be included in the overall calculations even if there is a balance owed on the credit card.

Also, if a closed credit card account is reporting a non zero credit limit but in actuality has a zero balance, the card will not be included in the calculations. Examine your credit reports closely and comb throught it with a close eye for these details. Often, one spouse will have a credit card and make the other spouse an authorized user.

Being an authorized user opens the door to have the history of that account counted into your own credit score. If you are removed as authorized user, then you lose that history. Nathan Randall, editor, DailyDollar Newsletter provides free daily advice on money matters plus coupons and discount codes. FYI…you can now access the DailyDollar Newsletter via iTunes podcast, YouTube video, and on Facebook and Twitter too.

2. Check your credit report for errors - this is one of the biggest factors that credit repair agencies bank on - the mistakes that can you easy remove yourself while you're in the process of credit repair. Look for wrong addresses, wrong social security numbers, accounts with balances that you've already paid off, and even accounts with late payments that were actually made on time. 3. Negotiate account payoffs - here's another area that you are typically charged for by credit repair agencies which you can avoid by doing the credit repair yourself.

All you have to do is call your creditors on collection or past due accounts and ask them to settle with you. Just let them know that you will pay off the balance, but that you are only able to pay a certain amount. If the creditor agrees, you have just saved a few hundred dollars and you now have a zero balance on that account.

5. Continue monitoring your credit score - here's where most people miss it big time. They take the initial actions to repair their credit themselves, but then they never follow up to be certain that those actions really helped their credit scores. That's the pitfall of doing credit repair yourself; you may not have a good system for following through until you get the results in your credit that you are looking for. The best tool to use here is a calendar and simply putting reminders every one to two months to check your credit report and credit scores again. As you can see, these are all simple steps that will guide you along the way to do the credit repair yourself. If you can do these 5 simple steps, then you have just saved yourself hundreds of dollars by not having others do it for you.

Having bad credit makes doing standard tasks - like applying for a loan or buying a car - nearly impossible. Some consumers aren't even aware that they have bad credit until some company turns them down, at which point, it is so far gone it will take years to repair.

Monitoring your credit score with free credit score websites and programs is essential. Otherwise, you could end up trapped in your financial situation. Credit score knowledge has never been as important as it is today. With a low score, it is impossible for a person to do simple things, like apply for a loan, get a new credit card, or secure a job.