I was wondering about improving credit scores. The main question I have is that I currently have about 4 credit cards. I have 2 that I use but the other 2 have a zero balance and I never use them. Is it better to keep them open and with a zero balance or to close them. I was going to close one of them, but when I called to close the account the customer service person said it would be better for my credit to keep it open and not use it. Is this true? thanks Mark
Mark, I would recommend keeping them open because it improves your debt ratio/available credit. The higher the CL and lower the balances = higher FICO. It also, depends on how old the cards are. You receive some points after the first year anniversary of the card date, more points the second year, and the maximum points for year 3. I have two cards that I rarely use (I make about 2 purchases a year to keep them active), but I refuse to close them because the accounts are 6 + years old (my oldest tradelines). Hope this helps. Dani
Mark, too many open lines with zero activity will depress your scores. And, believe it or not, the appearance of "paid, never late, closed at consumer's request" notations on your reports will actually increase your scores. On the other hand, not enough credit accounts will lower your scores, and not enough OLD accounts will lower your score as well. Result? Only you can be the judge, and you may not get it right. Here's what I would suggest: Close one of your accounts that is between 1 and 2 years old (you want to let every account age at least 1 year before closing it) that you never use; then have a look to see if your score was impacted. Ideally the account you close should be one with unfavorable terms from a subprime lender who you'd like to throw away anyway. I would not suggest you close your Bank of America Platinum VISA opened 22 years ago just because you haven't used it lately; instead, I would suggest you buy gas with it every month and watch your scores rise. I realize there's not a "yes" or "no" answer here, but I wanted to give you a taste of how some of the factors may play out for you instead. Only the FICO company could give you the "right answer" lol. Doc
It might be better to actually use them once in a while to build a payment history on the cards. I would suggest using them about three times a year not exceeding 20% of the credit limit and paying off the balances in two billing cycles. ie. credit limit is $1000. you use $200 pay of $100. when bill comes and $100 when next month's bill arrives. Do this about three times a year. This creates a payment history that they will report to the bureaus which will likely help your score.
