|
This credit report help article
may be reprinted at no charge only in its entirety, including byline. Please
send link to gerri@ultimatecredit.com.
310 words.
Think Twice Before Closing Old Accounts
By Gerri Detweiler,
consumer advocate and author of The Ultimate Credit Handbook.
www.ultimatecredit.com
When people order their credit reports, they almost invariably
find accounts on their credit report that are listed as open when in fact they
haven't used them for a long time, and don't intend to use them again.
Revolving accounts such as credit cards are rarely
closed unless you
specifically ask the lender to close them. You can call or write to the lender
(the contact information should be in your credit report) and tell them you
want to officially close the account and have it listed on your report as closed
at consumer's request. They must, by law, honor your request.
But before you close all your old inactive
accounts, consider the impact doing so may have on your credit worthiness.
Sometimes closing old accounts can actually hurt your credit rating
because it will shorten the average length of accounts on your credit file,
making it appear you have a shorter credit history than you actually have.
It may also decrease your available credit so if you carry balances you may
have a higher ratio of current balances to available credit, which may be harmful.
It can also affect a positive mix of credit references.
I know you’ve heard that having too much available
credit can hurt your credit rating. That may be true of some individual lenders,
but Fair, Isaac Co., creator of the popular FICO scores, says they do not consider
the amount of available credit as a stand-alone factor. In fact, FICO
says that closing old or inactive accounts can never help your credit but can
only hurt it. If you do want to close out old accounts, do so slowly
and selectively. And make sure you leave some of the older ones open for good
measure.
Copyright 2003 by
Gerri Detweiler, all rights reserved.
Gerri Detweiler
is considered one of the country’s top credit experts. She is co-author
of Stop Debt Collectors Cold, (www.stopdebtcollectorscold.com),
a valuable resource for understanding your rights when in debt. Gerri has been
interviewed in thousands of radio, television and print news stories including
USA Today, The Wall Street Journal,
The New York Times, Dateline NBC and many
others. She has testified before Congress several times and worked on reform
of the national credit reporting laws.
Contact Gerri at:
gerri@ultimatecredit.com
to learn more.
|
