A Good Credit Score is to Your Best Advantage!

I have over 25 active VISA and MasterCards but I only use one credit card.  No, I am not crazy, I use them to increase my credit score and reduce any interest rate charged to me on future loans.  

I can identify people who have no clue how credit works just by listening to what they have to say.  If you feel like you’ve got too many credit cards in your wallet and you’re thinking about closing some accounts and you want to cut up the cards, forget about it.

It is a good idea to look at how the credit scoring process works and what affect closing credit accounts have on your score first. Pay close attention to your Credit Utilization Rate and the terms of the credit cards that you want to cancel.

Credit Utilization Rate 

One of the factors that figures into your score are your credit utilization rate, which measures how much debt you have compared to the amount of credit you have available. In other words, the more credit you have access to but don't use, the better your score. Consumers with the highest credit scores typically only use a small amount of their available credit at any given time. 

By closing a credit account, you have less credit available. This makes it look to credit bureaus as if you're using more of your existing credit, even though you might not have made any other changes in your credit behavior. And that raises your credit utilization rate, which could put a dent in your credit score. 

Terms of the credit card

Understand the terms of the credit card account you wish to close. To attain the optimum score, you need to have open, positive accounts that demonstrate a diverse mix of credit. 

If you do Still Want to Close Accounts 

When I do close an account, I close the accounts that carry a substantial annual fee; especially after a balance transfer introductory rate has expired. I suggest you do the same. Just be sure, if you feel you must close accounts, you're not about to make any major credit-dependent purchase, such as applying for an auto loan or even a mortgage. 

You’d be better off closing them once you’ve secured your mortgage. The lower your Credit Utilization Rate, the better your score, the lower your potential interest rate for new loans. 

A slightly lower credit score could result in a higher interest rate than you deserve and end up costing thousands more over the life of a loan.

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This is the end of the first 60 days of 2013 so how is my Individual Junk Bond IRA investments doing? My chart shows that my portfolio increased by 1.723% in the past 60 days (does not include my yearly contribution). Savings accounts at bank increase yearly at .5%. So far the stock market in general is ahead of me with a 7.52% for the past 60 days. If you pick the right stocks you can have that return.