As credit score is very important to get better financial deals like mortgage at lower interest rate,every one is interested in having a better score.The kind of advice you get some times from some one is misleading and you will fall in that wrong notation.Here I am going to discuss some of this wrong beliefs and try to analyze them.
1.Closing Accounts help in improving the credit Score
It is a wrong impression that every one gives to consumers that closing accounts help in improving the credit score.This may not be the truth and some times even leads to loss of valuable score.
This three digit magic number is a indication of your financial responsibility.Once you start paying your bills on time and do it over the time,your score and report will be good.This tells about you to the lenders that you are nice in paying back the commitments that you have obliged.Longer the history of payment history you maintain in good condition,more the credible you are.Business people like lenders and bank representatives keep searching for the guy like you.When ever they find you,they flood you with good deals with lower interest rates.
Opening the credit lines that are not in actual need are seen in a negative way and per sure they are going to reduce your score.The damage is done and it is not just reversible.That is closing the account is not going to give you back your score.
Negative affects of closing a active account :
In fact it is going to further reduce your number low for two following reasons.
1. If you close a account,that too a older one,your average age of the credit will be reduced.It is seen in a bad by the lenders.Older the age better for them and they feel that you are more reliable.
2. Cl0sing a existing account reduce the total available amount of money as credit for you.Better the gap between the available amount and used money for nice FICO score.Closing account reduce the available balance and reduce the gap between available and used money. It is not about paying the bill on time.This negative affect will be there even when you pay all the bills on time. At times people miss lead you about this and if your score is improved,it is not because of this reason and there could be another good reason behind it.
You can close your accounts when :
1.You can try closing the unwanted and unused cards when you are having 700+ score.But they shall not be high limit and old accounts.Other wise wait until your score is improved.
2.If you are worried about uncontrolled spending and to come out the problem,your solution is to close some accounts.Here,at least for the time being,credit score is not your serious concern.
3.If a lender has approved a loan or mortgage on the condition that you shall close the unused accounts and got the approval,you can explore this option.Here the benefit that you are getting shall be much better than the loss of the score.
Help in improving your three digit number
Fix score by paying down the debit
Source to get money and pay bills to improve credit score
1.Closing Accounts help in improving the credit Score
It is a wrong impression that every one gives to consumers that closing accounts help in improving the credit score.This may not be the truth and some times even leads to loss of valuable score.
This three digit magic number is a indication of your financial responsibility.Once you start paying your bills on time and do it over the time,your score and report will be good.This tells about you to the lenders that you are nice in paying back the commitments that you have obliged.Longer the history of payment history you maintain in good condition,more the credible you are.Business people like lenders and bank representatives keep searching for the guy like you.When ever they find you,they flood you with good deals with lower interest rates.
Opening the credit lines that are not in actual need are seen in a negative way and per sure they are going to reduce your score.The damage is done and it is not just reversible.That is closing the account is not going to give you back your score.
Negative affects of closing a active account :
In fact it is going to further reduce your number low for two following reasons.
1. If you close a account,that too a older one,your average age of the credit will be reduced.It is seen in a bad by the lenders.Older the age better for them and they feel that you are more reliable.
2. Cl0sing a existing account reduce the total available amount of money as credit for you.Better the gap between the available amount and used money for nice FICO score.Closing account reduce the available balance and reduce the gap between available and used money. It is not about paying the bill on time.This negative affect will be there even when you pay all the bills on time. At times people miss lead you about this and if your score is improved,it is not because of this reason and there could be another good reason behind it.
You can close your accounts when :
1.You can try closing the unwanted and unused cards when you are having 700+ score.But they shall not be high limit and old accounts.Other wise wait until your score is improved.
2.If you are worried about uncontrolled spending and to come out the problem,your solution is to close some accounts.Here,at least for the time being,credit score is not your serious concern.
3.If a lender has approved a loan or mortgage on the condition that you shall close the unused accounts and got the approval,you can explore this option.Here the benefit that you are getting shall be much better than the loss of the score.
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