In this country, you basically are what your individual credit score says you are. However, in
other countries, an individual credit rating does not exist, and credit worthiness would only be
taken into account for larger corporations. A credit score can be thought of as a sort of score
sheet. Your entire financial history (money owed, payment history, etc.) is all part of your score
sheet. Every payment you make (or miss) will become a permanent part of your credit rating.
That should give everyone a better knowledge of a credit score’s importance, so now let’s
concentrate on how to help it a bit.
Keep Unused Credit Cards Active
Many people will instruct you to always close credit card accounts that you no longer use.
This advice has been echoed by the credit industry for many years now, and it certainly has
its merit. Doing this can reduce the risk of credit card theft or even identity theft. However,
closing an unused credit card will not help your credit, and may actually hurt it. Closing
down these accounts can affect your balance vs. available credit ratio, and directly impact the
amount of credit a lender will offer to you. Closing these accounts will also take a valuable
piece of credit history off of your record.
The more credit history you have, the more apt a lender is to consider you. If you are
planning to apply for a larger loan in the near future, do not close any inactive accounts, and
also do not open any new lines of credit at that time. If your credit history is a tad on the
short side, then opening a line of credit will ultimately decrease your credit score because
you haven’t proven your worth in the eyes of the lender. Your overall score will take into
account the average of all your balances, which will go a bit lower upon opening a new
account. Keep in mind that if you already have a fairly high credit score, closing an unused
account will have a minimal effect. If that piece of mind is worth it to you, then by all means,
go for it.
Nicolas “Yogi” Muller | www king-and-assoc.com
Article Source: http://www.articlesbase.com/credit-articles/use-inactive-credit-cards-to-improve-your-credit-4696839.html
About the Author
Nicolas “Yogi” Muller | www.king-and-assoc.com