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Closing Your Credit Card Account Will Not Raise Your Credit Score!
Everyone has become more concerned about their credit scores and try to think of ways they can raise them. And that's because higher scores mean lower credit rates and lower payments, which ultimately will save you thousands of dollars in interest. But if you're like some people and trying to raise your credit score it will actually hurt your score.
When people cancel their cards or in other words close their credit card accounts, scores can actually drop and drop by a lot of points. This is a common occurrence now because it's assumed it'll help the score by having less available credit. But it's not true.
There are five things that make up a credit score, also called FICO. They are payment history, which accounts for 35% of the score and refers to accounts that are paid for as agreed upon, how many past due accounts there have been, if any, and so on. Then amounts currently owed accounts for 30% - what is owed on loans, the proportion of the installments that are still owed and the debt-to-credit ratio. Then there is the length of the credit history - how long you've had the accounts, when you last used it, etc.
Then about 10% of your score accounts for new inquiries, new accounts, etc., and lastly about 10% accounts for the type of credit that is used- which means how much is allotted to your mortgage, if any, how much to retail, etc.
Even if you've always paid your accounts on time, never had a late payment and pay it early it doesn't matter in this case. Closing your account will not raise your score.
You'll not be penalized for having too much available credit no matter what you hear. You want to keep all your credit card accounts especially old established accounts - those that have given you credit history, assuming you made payments on time, didn't have late payments, etc.
So it's wise not to close your credit card accounts. By closing them it will not raise your credit score and will lower it and possibly significantly so as many have reported. You don't want to be one of them. Make sure to get your current free annual credit report to see where you stand and to make sure it's correct so you can fix it if it's not. Many mistakes are made on reports. You can get them free annually too from all three reporting agencies.
About the Author For more tips, secrets, how to get a free credit report online instantly, fix your own credit and get help with credit counseling and credit disputes -get advice, avoid scams and get free help from a caring credit expert - go to http://www.FreeCreditReportInstantOnline.com
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