My girlfriend, who is more knowledgable about finance than myself, claims this is true. This seems counterintuitive to me and I need some more insight.
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Your credit score is essentially the amount you can borrow at any given time. It combines all your credit lines/debt. So if you had say a 20k loan you could afford to pay off in one shot, that would know 20k off your credit line. So its usually a good idea to replace it with a new line if credit, so the total you can borrow doesn’t drop.
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