How Open Credit Accounts Affect Your Credit Score

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Those that have a credit score of 730 and above are the fortunate few in the country who are considered to have excellent credit. The average credit score in the country, or FICO score as it is often referred to, is somewhere in the neighborhood of 690. And, with the economy slowly going deteriorating, more people each year are finding their credit scores drifting into dangerous territory, 550 or under.

If your credit score is low, it is in your best financial interest to try your hardest to bring it up. Doing so will save you thousands of dollars and more in the long run. Bringing your credit score up is not too hard to do, if you know the factors that determine the score. Here are some tips to help you.

Keep to a minimum the number of credit accounts that you sign up for, even though it can be extremely tempting to take advantage of some of the great offers that come through the mail. Because of these offers, many people find themselves signing up for a new card offering cash back rebates, frequent flier miles, or other incentives.

Up to a specific range, however, every extra card or line of credit that you open up will result in your credit score taking a hit. So, if you have a lot of cards and want to get your credit score up, start to cancel some of the cards that you really don't need.

If you apply for too many pieces of credit in too short of a time frame, your credit score will take a hit. For one reason, this is a pattern used by many con artists. For example, applying for 4 credit cards over the course of a 3 month period will raise some red flags. However, multiple inquiries against your credit file in a thirty day period for an auto loan or a mortgage will not cause your credit score to be lowered.

In cases like this the credit companies realize that the inquiries all relate to the possibility of opening up only one credit line and therefore, internally, they will treat these collection of inquiries as only one.

Don't go over your limit on your credit cards. This is another red flag that will cause your credit score to be lowered. Try to pay off your debts as quickly as you can and try to avoid rolling over balances from month to month.

New credit accounts in general tend to lower your score a bit. Over time, however, as these accounts become aged, assuming that the accounts have been handled responsibly, your score will improve. All of these tips can go a long way towards helping you to build a positive credit history and getting your credit score into a healthy range.

Article Source: http://depositarticles.com/

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