Many people make one mistake when they decide to improve their credit score. They close all or most of their accounts without genuinely understanding how credit works. If this sounds like something you would do, click here to speak to a trusted credit expert for free! It is common for people to think that the fewer debts they have, the better their score will be, but this can be the opposite. If you close an account and then find that you need it again due to a change in circumstances, you will need to reapply for the credit. As that will involve another inquiry on your account, it will be detrimental to your credit score and can cause it to drop.
How Credit Bureaus Look at Your Credit Score
Most of the credit bureaus will give a higher credit score to those whose credit history shows that they have had credit for an extended time without any problems. Closing long-term sources of credit can lower your score, and you should probably consider keeping these sources of credit going even if you prefer to close them. You are better off approaching more recent sources of credit that you created. It would be best to transfer debt from the newer accounts to the older account to take advantage of the age factor.
Making The Right Decision
To continue, you must also look at when you will need the benefit of a boost in your credit score, as closing accounts will generally lower your credit score in the short term. Still, it can help to increase your score in the long term. If you intend to get more finance soon, it wouldn’t be wise to close accounts; however, if you don’t intend to borrow any new funds for a while, you might close accounts sooner as part of your financial planning.