Sometimes people in debt can be persuaded to do crazy things. Here’s one example:
Dear Debt Adviser: In an effort to improve my credit, I accepted a very bad credit card offer. My FICO is around 500. The card has a credit limit of $300 with a $6.50 monthly fee and $150 yearly fee and rate of 25 percent, so even if I pay the card off each year $150 is added on. I keep reading that if I cancel cards it will impact my score negatively. This card is horrible. My question is: Should I cancel the card immediately or wait until I pay it off and cancel it?
Sadly, this person has it wrong. Don’t use credit to clean up your credit or debt problems. That’s what got you into the situation you are in. Repeating it will only make things worse.
To clean up your credit, pay down your debt. Don’t take on more!
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