Less Debts Same Score

One mistake that many people make when they decide to improve their credit score without understanding how it works is to close all or most of their accounts.

It is common for people to think that the fewer debts they have, the better their score will be, but the opposite can be the result of doing this.

If you close an account and then find that you need it again due to a change in circumstances you will need to reapply for the credit and as that will involve another inquiry on your account it will be detrimental to your credit score and can cause it to drop.

In addition to this most of the credit bureaus will give you a higher credit score if your history shows that you have had credit for a long period of time without any problems.
Closing long-term sources of credit can actually lower your credit score and you should probably consider keeping these sources of credit going even if you prefer to close them simply because of the value they can add to your rating.

You are better off closing more recent sources of credit and provided the interest rates are comparable you should transfer debt from the newer accounts to the older account to take advantage of the age factor.

You also need to look at when you will need the benefit of a boost in your credit score as closing accounts will generally lower your credit score in the short term but it can help to increase your score in the long term.

If you intend to get more finance soon then it wouldn't be wise to close accounts however if you don't intend to borrow any new funds for a while then you might close accounts sooner as part of your financial planning.