I have 2 credit cards on my credit report that I've never used. I've heard that the less credit you have avaible the higher your score will be (less cards/credit to max out on). But I've also heard that if you close accounts it lowers your score. Should I close them?
2006-06-29 16:21:22 · 3 answers · asked by hhhthegame 3 in Business & Finance ➔ Credit
This is a tricky question given the information because different financial institutions score different characteristics on credit bureau reports (CBR's) differently. For instance, a mortgage company would probably weight prior mortgage history more strongly than anything else in the score, auto-finance company weight auto payment history the strongest, etc.
Generally speaking, revolving credit lines and how they are paid are arguably the best indicator of how someone will pay any other type of credit line/loan. If these are the only 2 items reporting on your CBR's currently, it would be a better idea to use one or both cards moderately and pay the balances off monthly (or keep low balances and don't ever let them approach the high credit limits) to show responsibility in paying your credit lines. This will also help your 2 creditors raise your credit lines.
How does raising your credit limits help? One of the stock, built-in formulas affecting basic credit scores (provided by the credit reporting agencies, themselves) is the ratio of outstanding credit balances (all added together) versus the sum of high credit limits. If this ratio gets out of hand (i.e. all credit cards are approaching being maxed out or are over their limits) your score will definitely suffer severely.
Other factors are any collection accounts, bankruptcy(ies), repossession(s), or anything else derogatory (payments late in excess of 30 days+). I hope this helps.
P.S. If you are rich, I wouldn't really worry about it! :-)
2006-06-29 16:40:59 · answer #1 · answered by dlfield 3 · 2⤊ 0⤋
I don't think that it is true that if you have more credit you have a lower score. I have lots of cards (at least 8 or so) and I have a really high credit score. As long as you pay back what you owe on time, your score will be good. So, I wouldn't worry about it.
2006-06-29 16:26:16 · answer #2 · answered by Princess 5 · 0⤊ 0⤋
No. (Keep them open)
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2006-06-29 17:38:02 · answer #3 · answered by Anonymous · 0⤊ 1⤋