How To Increase Your Credit Score – Part 2
Many people are under the impression that closing credit card and other revolving debt accounts helps to improve their credit score. In reality, the opposite is true and by doing so they will create more harm than good.
This is because the algorithm used by the credit bureau's to calculate your credit score looks at the amount you owe versus what credit you have. Obviously the ratio is much better if you owe $0 on a credit card with a $5,000 limit than if you owed $2,000 on the same card.
So the key is to NEVER close any credit card that does not have an annual fee. By doing so, all things being equal you will see your credit scores improve over time.
Another tip: make sure you use all your open cards once each 90 days so they register as "active" as this is also factored into your credit scores. You can charge as little as $1 to make this happen.
If you have any questions regarding CALIFORNIA refinance or purchase mortgages feel free to call me on (925) 951-8896.