Get Out of Debt 101 Blog

Today we will discuss the third step to improve your credit score. This one is easy to do; in fact it’s something you should NOT do.

Remember that “Length of Credit History” accounts for 15% of your total credit score, which is still a good number. Consider that every point counts, since a person with a 719 FICO score (very good) will get a higher interest rate than a person with a 720 score, everything else being equal.
So what you need to do here, or NOT do, is this: Do not close your older revolving accounts. If you do need to close an account, see which one is newer and close that one. If you close your older accounts you are effectively affecting the length of your credit history, thus reducing a few points from your score.

The reasoning behind this is simple: Let’s say you were a credit manager and you had two applications for credit on your desk. One is from Person A, the other from Person B. Which of the two would you consider a riskier person, A who has 4 accounts that were opened 7 years ago, or B who has 4 accounts that were opened 2 months ago?

So make sure you keep open your old accounts, even if they have no balance. In fact if they have no balance, make sure you use them occasionally or you will risk having them closed down for inactivity.

Tomorrow we will discuss step 4 to improve your credit score, so make sure you don’t miss it!

And remember to let everyone you care about know about this blog so they can benefit too. See you tomorrow!