Closing Credit Card Accounts WILL NOT Boost a Credit Score

This one is favored by many mortgage brokers. They like to advice that you close some of your credit card accounts so that the lender is not scared by the amount of credit you have available to you. "After all, you could at any point run out and start charging left and right to accumulate a huge debt".

The FICO formula tries to predict your behavior based on your past. It knows that if you have not rushed out and charged up a storm, then you are not likely to do so in the future. As a result it considers you to be a more responsible, moderated person when it comes to credit use. This gives you a better credit score.

Don't take this as advice to run out and get a bunch of credit cards. The credit score formula dings bad credit behavior. Applying for a bunch of credit cards that you don't need is just not smart.

Many people with good credit find that one of the reasons that their credit score is not higher, is that they have "too many open accounts". This is very common feedback for why a credit score is not perfect. In fact, people with perfect credit just do not exist. We all have something that the credit score formula looks at as a negative. Since by law a reason has to be provided as to why a credit score is not perfect, the "too many open accounts" reason is one of the most popular and least damaging reasons you will find listed on a report for individuals with scores in the mid-700s or above.

DO NOT CLOSE YOUR CREDIT ACCOUNTS!
Doing so can make your credit history look younger than it is and reduce the total available credit as it relates to the amount of credit you use.

If you still feel compelled to close a credit account, you should consider several factors:

1. Your credit score should be in the mid-700s or better
2. You should close only the youngest credit account
3. Make sure you are not closing an account with the highest-limit

The worst thing you can do is close your oldest credit card if it also has the highest credit limit.

A small disclaimer: Each lender has a unique set of guidelines on how they use your credit score along with your credit report. You might encounter a lender that requests you to close an account in order for them to give you a loan. In this case you should consider how important this loan is to you, how committed the lender is to giving you the loan, and if this is the only lender that is willing to lend you the money.