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Credit > Improving Your Credit Score (1)
Voluntarily close your accounts
Pay down loan and credit card balances
Limit the number of new accounts and inquiries
Pay off accounts that are public records, "charge-offs" and collection accounts
Voluntarily close your accounts
When you voluntarily close an account, the creditor is responsible for reporting it to the credit bureau and it should be documented on your credit report as "closed by consumer." The fact that you took the initiative in closing the account is an indication that you understand how to maintain reasonable use of credit and you are in control of your spending. After notifying a creditor that you want to close your account, you should always ask a creditor to provide a letter confirming that the account was reported to the credit bureau as "closed by consumer." By doing so, you can easily have it corrected if you later find that it is reported incorrectly on your credit report.
To optimize their credit score, consumers must maintain open accounts, but the number of accounts should be limited. Credit scoring models rate against "Too many bank revolving accounts" and "Too few bank revolving accounts." Establishing a consistent timely payment history on one or two major credit cards and limited merchant cards (department store cards and gas cards) will help to build a sufficient credit history. It is wise to close as many merchant cards as possible, especially on accounts that you opened solely for the purpose of making large "one time" purchases. For example, if you opened a credit line with an electronics store to purchase a computer, you should voluntarily close the account when the balance on the computer has been paid off, especially if you have no need for any other merchandise from that store. Otherwise, the account would remain open, which indicates that there is a potential that you will charge more debt. Generally speaking, large amounts of available credit can weigh against your credit score. The higher the cumulative total of available credit, the riskier it is to lend to the consumer. If a consumer has easy access to large amounts of available credit, one spending spree can cause them to go from financial stability to financial trouble.
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