Tip #15: Don’t make the mistake of closing lots of credit accounts just to improve your score.
This seems like a contradiction, but it really is not. Many people think that to improve their credit score, they just have to pay off some debts and close their accounts. This is not exactly accurate. There are several reasons to think carefully before closing your accounts.
First, if you close an account you need (for example, if you close all your credit card accounts) then you will have to reapply for credit, and all those inquiries from lenders will cause your credit score to actually drop.
Secondly, most credit bureaus give high favorable points to those who have a good long-term credit history. That means that closing the credit card account you have had since college may actually hurt you in the long run. If you have credit accounts that you don’t use or if you have too many credit lines, then by all means pay off some and close them. Doing so may help your credit score - but only if you don’t close long-term accounts you need. In general, close the most recent accounts first and only when you are sure you will not need that credit in the near future. Closing your accounts is a bad idea if:
1) You will be applying for a loan soon. The closing of your accounts will make your credit score drop in the short term and will not allow you to qualify for good loan rates.
2) Closing your accounts will make your overall debt balance too high. If you owe $10 000 now and closing some accounts would leave you with only $1000 of possible credit, you are close to maxing out your credit - which gives you a bad credit rating.
Use your credit wisely stay around 30% of your available credit limit for your strongest scores. got to www.questgroup-usa.com and use their free calculators (debt, rent vs. buy, refinancing, purchasing) you can also go to www.credithelp21.com and get your very own Do It Yourself Credit Repair Kit and save hundreds if not thousands of dollars.
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