A good credit score can open doors in life. It can help you buy a home, start a business, or buy a car as transportation to a new exciting job. If you have a sub-par credit score, achieving your goals or taking advantage of opportunities will be difficult. Fortunately, there are easy ways to drastically improve your credit score.
Closing unused accounts will more than likely cause your credit score to go down. Your credit utilization is used in the calculation of your score. Closing accounts will increase your utilization percentage, causing your score to go down.
Additionally, the age of your oldest account is also used in the calculation of your score. If you happen to close the account you’ve had the longest, your credit score could be affected.
This might seem counterintuitive, especially since a hard credit inquiry will be performed which may ding a few points off your score. The upside is that any new line of credit will decrease your credit utilization percentage resulting in your score heading in a positive direction. Just make sure to not run up a balance, negating the positive effect of opening the account.
Having a good credit score makes achieving lifelong goals easier, as well as taking advantage of financial opportunities. If you have a low rating, you can drastically improve your credit score by doing some simple actions. It won’t happen overnight, but if you exercise self-control and discipline you can improve your credit score.