San Antonio Credit Counseling: The Pros and Cons of Credit Accounts

Credit and debt are some of the things many Americans find difficult to overcome and, sometimes, understand. The dynamics of credit and payment entails more than the simple definition you’ll find on the Internet. Thus, numerous agencies have emerged to provide credit counseling in San Antonio and other major cities to help people understand where they stand in relation to their debts and how they can handle their finances better.

An article posted on The Motley Fool discusses credit cards and how they affect a person’s credit standing. While financial advisers normally warn against extreme use of credit for purchases, credit card companies continue to lure users with promises of convenience and improved buying capacity.

The article notes that opening a new credit account isn’t always a bad decision. There are conditions that justify it, such as:

Your credit history is extremely limited. Building a credit history from scratch is difficult, but you’ll need to start somewhere, and opening a credit card is an easy way to get the ball rolling.

You don’t have much available credit, and you don’t put any purchases on the new card. A whopping 30% of your credit score is determined by how much you owe, and approaching the credit limits on your cards definitely hurts your score. If some of your credit cards are maxed out (or pretty close), it will probably help your credit score to open a new card and then not make any purchases with it.

In the long term, credit cards can extend your credit line and provide better payment history, according to a related report in Money Talks News. The establishment of a new credit account has an immediate effect on your short-term credit score, but it can be recovered quickly. What poses a problem is the immediate spending power these credit cards provide.

Opening too many accounts in a short span of time can hurt credit score. A person’s irresponsible spending and charging from a card that has not much credit left will also drag a credit score down.

The credit card does complicate people’s credit scores. Keeping track of credit accounts and using them responsibly and wisely help users earn good credit scores. Individuals interested in learning more about credit cards in general can solicit credit counseling in Austin, from financial consultants such as Credit 360 Consulting.

(Article Excerpt and Image from The Power of Plastic: How Opening a Credit Card Affects Your Credit Score, The Motley Fool, September 29, 2013)

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