bharatbhasha.com
Free Articles  >>  Business And Finance >>  Page 3347  >> 

Fact or Fiction Closing Old Credit Cards Can Help Raise Your Credit Score





It can be very confusing to answer the question of whether or not to close older credit card accounts, especially to someone who is just learning about how to repair their credit. On the one hand, these are probably cards that you rarely, if ever, use. On the other hand, they represent a major portion of your credit history. Let's look at both sides of this double-edged sword and determine the best course of action.

First, let's talk about your credit history. In terms of your credit score, length of credit history accounts for a full 15% of your score. This may not seem like much at first, but all you have to do to get the maximum points is open an account as soon as you are ready, and keep it open. That's it, the rest is out of your hands because it just depends on time. So that 15% is actually very easy to get, provided you have opened a credit account as soon as you were responsible enough.

So your credit history is important, but let's talk about usage. Let's say you opened your oldest credit account in college. Maybe you got a great introductory rate on a credit card, used it every day in college for purchases, then you graduated, got a good job, and suddenly you were eligible for much better credit card rewards.

Armed with higher limits, airline bonus miles, cash back and other credit card benefits you soon stopped using your first card. Maybe it's had a $0 balance for 10 years, and you're beginning to feel like keeping the company updated with your new addresses and phone numbers is not worth having the card anymore.

What you should do with this old credit card depends on your situation. If you have another credit card that is almost as old as the first one you may not take a very big hit to your credit score, if you take on at all. However, if your next oldest account is actually years younger then you are increasing your risk of decreasing your score. Closing your oldest revolving credit account will almost certainly affect your credit on some level.

What would a better solution be? Make use of the card. You see, lenders want to give credit to people who will use it, so the usage of credit also factors into your score. It is recommended that you take the oldest card out once a month and buy something with it: a tank of gas, a trip to the grocery store, or maybe just lunch. No matter how you do it, just use the card once, pay it off immediately, and then forget about it for 30 days. This will ensure that your account remains "active" and you can still use your more rewarding cards most of the time.

So, to answer the question we posed in the title of this article: no, it will not help your credit score to close down your oldest accounts. In fact, closing those old accounts could very well hurt your score based on the 15% contribution that length of credit history makes to your total score. With just a little planning and careful use, your old cards can remain useful and contribute to healthier credit.
About Author Ryan J Bell :

This article has been provided to us by Veracity Credit Consultants, an innovative credit score repair company. Check them out online at <a href="http://www.VeracityCredit.com" target="_blank">http://www.VeracityCredit.com</a>


Article Source: https://www.bharatbhasha.com
Article Url: https://www.bharatbhasha.com/finance-and-business.php/125028


Article Added on Tuesday, April 14, 2009
LD
Other Articles by Ryan J Bell

Components of a Credit Score
The factors on your credit report that are used to determine your credit score are broken down into 5 categories, each with it's own weight on the equation. 1. payment history (35%) 2. amounts owed (30%) 3. length of credit history (15%) 4. new credit (10%) 5. types of credit used (10%) Payment History One of the primary reasons that the credit scoring system was developed and why lenders still use it is to determine the likelihood that they will be repaid the money you borrow. Therefore, it...

Applying For Multiple Lines of Credit at Once Can Hurt Your Score
A lot of confusion and debate surround the question of whether or not your credit score can be negatively affected by applying for credit, especially when you apply for a lot of credit at once. People are often uninformed or misinformed of the facts about how much your score is affected, why it is affected, how the application process actually affects your score, and for how long the effects last. To begin to set the record straight let's start simply: applying for credit typically affects...

Understanding Your Credit Score
Credit scores are mathematical expressions which are derived from statistical analysis of the positives and negatives of a person's credit files. The algorithm compares these data points against data collected from other credit reports to create a summary of the credit-worthiness of that person. Generally speaking, your credit-worthiness is a measure of how likely it is that you will repay your obligations on-time. Therefore, a lower credit score means you are less likely to repay or pay on...

Do You Need Credit Repair
Many people, websites, and books will tell you that credit repair can be a do-it-yourself process. They are all absolutely correct. It is your right under the FCRA to be able to correct any errors on your credit report. However, there are also thousands of stories of credit repair being frustrating and time-consuming for the average consumer. Knowing that credit repair can be a time-consuming process or cost money to work with a professional, it is worth finding out if you even need credit...

Using Credit Versus Never Using Credit
Have you ever heard someone proudly proclaim that they never use credit for anything? That they pay for everything with cash or check and have never even had a credit card? Maybe they are even so bold as to claim that their lack of credit usage gives them a better credit score overall. It certainly sounds like a noble cause. After all, it can be very difficult to live in the United States or Canada without making use of credit cards, student loans, auto loans, or home mortgages. But here...

How Much of My Credit Score is Based on Payment History
The very basis of credit scores is for lenders to determine how likely it is that you will repay any money that they lend to you. A 'lender' can include anyone from a credit card company, to a mortgage broker, and credit union to a student loan office. All of these people look at your credit score to determine how risky it is to loan money to you. Therefore, it makes sense that a significant portion of your credit score is based on your history of repaying debts. Although past performance is...

Payment Processing Accepting Debit and Credit Cards
Running a business - whether online or retail - means being able to process your customers' payments in a variety of ways. While many people will pay with cash, a large portion of your customer base will likely use their credit cards to make purchases. You need to be ready for them by having a way to process those transactions. What's more, there is another challenge to think about when you're looking for a payment processing solution: debit cards. Debit cards are becoming increasingly popular...

Why Should I Worry About My Credit Score
The Fair Isaac Coporation, creators of the FICO credit scoring system, recently discoverd that 49% of people polled did not know that credit scores measure credit risk. Even if you already know the basic facts about credit, you may not realize the impact credit can have on your life, and how your credit report plays a role. Your credit score, like your driving or medical records, follows you everywhere you go. However, your credit score can fluctuate daily without you doing anything to...

Who Can Really Benefit From Credit Repair
Credit repair helps thousands of people every year to improve one of the most important facets of their personal finances. However, poor marketing practices and legitimate success stories published in the media have led to many people being disillusioned or misinformed about the repair process and what it can offer. Although no credit product or service can promise gains in your score in a short time period, it is not unlikely for those who are truly in need of credit repair to achieve...

4 Businesses That Require Flexible Payment Processing
When you're starting a business, you'll be forced to make dozens of decisions that can impact your company's long-term success. One of your primary concerns should be how you'll process payments. After all, many people don't use cash for their purchases. That means you'll need to be able to accept credit cards from your customers. In the past, credit cards were used mostly for large ticket items (i.e. computers, beds, sofas, etc.). Today, they're commonly used for groceries, stamps and other...

Click here to see More Articles by Ryan J Bell
Publishers / Webmasters
Article ID: 125028
DELINK URL from Authors Bio
REMOVE Article
Tell A Friend
Leave A Comment!
Download this article in PDF
Report Article!
Search through all the articles:


171 Users Online!!
Related Articles:
Latest Articles:
 
Business And Finance >> Top 50 Articles on Business And Finance
Category - >
Advertising Advice Affiliate Programs Automobiles
Be Your Own Mentor Careers Communication Consumers
CopyWriting Crime Domain Names DoT com Entrepreneur Corner
Ebooks Ecommerce Education Email
Entertainment Environment Family Finance And Business
Food & Drink Gardening Health & Fitness Hobbies
Home Business Home Improvement Humour House Holds
Internet And Computers Kiddos and Teens Legal Matters Mail Order
Management Marketing Marriage MetaPhysical
Motivational MultiMedia Multi Level Marketing NewsLetters
Pets Psychology Religion Parenting
Politics Sales Science Search Engine Optimization
Site Promotion Sports Technology Travel
Web Development Web Hosting WeightLoss Women's Corner
Writing Miscellaneous Articles Real Estate Arts And Crafts
Aging


Disclaimer: The information presented and opinions expressed in the articles are those of the authors
and do not necessarily represent the views of bharatbhasha.com and/or its owners.


Copyright AwareINDIA. All rights reserved || Privacy Policy || Terms Of Use || Author Guidelines || Free Articles
FAQs Link To Us || Submit An Article || Free Downloads|| Contact Us || Site Map  || Advertise with Us ||
Click here for Special webhosting packages for visitors of this website only!
Vastu Shastra

Email Marketing In India Provided By AwareIndia







Company IDS