Credit Card Account

03:28:42 AM Monday, October 08, 2007

Canceling Credit Card Deals May Drop Your Credit Score

From college years we start thinking about our credit score. No wonder, it is the basis of our future credit life. The best credit deals, a mortgage loan, not to mention car rentals depend on our credit card score. That's why it is so valuable for us. To boost your credit score may be a tough job, and we become so frustrating when it lowers because of our foolish mistakes. Sometimes we are afraid to take this or that step, for we don't know, what impact it will have on our credit card deals. More and more cardholders fear to close their credit accounts for they don't know for sure what result it will have. Let's clear this question up!

These days, to have a ton of credit cards is a general practice for many students. Perhaps, the main reason is an ever-increasing number of special student credit card deals that imply fewer restrictions for youth folks. The example of a harsh credit lesson can be a story of Natalie Crowell, 27.

"When you are at college, it's so easy to have many credit cards at a time," says Natalie. "I managed to pay off my debt of $15,000, so I decided to close all my accounts and start afresh." However, this daring step had unexpected consequences. To cut it short, her credit score was dropped.

The explanation was quite tedious. Her credit history turned out to be too short and the available credit of hers was maxed out. So, the results of her hard work with credit debts were quite surprising. By all means, it's not one of those credit hits that can seriously damage your good credit history.

Let's face it! First of all, everything depends on the circumstances. It really can influence your credit score, if you close some old account of yours. It's not a secret that various factors affect our credit history. One of them is the average age of your credit accounts.

So, if you have several credit card accounts and one of them is old, you'd better keep it open. When you close it, the utilization of your credit will increase and such situation is considered to be not so favorable. On the other point, if you have an account and don't use it, what's the point to pay an annual fee for it?

As the old saying goes, the devil is not so black as he is painted. In truth, this closing of accounts won't hurt you so much. You will lose no more than 30 or 40 points. Still, if it's so essential for you, close the accounts carefully and don't forget about possible effects of this step.

And credit card score is a great tool in your hands, it influences your credit capacity and therefore your credit card deals. You are the only responsible for your credit matters. It's like playing chess, you should foresee the reaction of another party, i.e. credit agencies. One false step can cost you dear.

Credit card business has certain secrets and myths. Even if you are sure that you make everything right, it appears to be a mistake. No one knows those secret formulas that count our credit score. That's another reason to be very cautious while arranging credit card deals.

I have the same problem as Natalie. I've recently closed one of my old accounts and lost some points that has damaged my credit score. But I don't understand why the close of the old account I don't use should affect my FICO score?