There are often misconceptions regarding the effects of your innumerable accounts on your credit score. It has been seen that a relation certainly exists but it is not that far fetched as reported by the experts. There are no written records specifying the fact altogether. It actually depends on various other factors and circumstances as well. If you have any doubt whether you should cancel out your credit cards in order to score well just stop to think. It may not be that important!
The credit score specified by financial bureaus may not be the same as your FICO score. Equifax may have certain restrictions regarding the number of credit card accounts that you hold but it is not necessary that your FICO score will be exactly similar. The lenders also have their own specifications for lending money. Some may not care about the number of account that you hold and the other may even reject you just on the basis of that. Generally it is a common norm that the lenders check out your FICO scores and not the other scores before lending. Therefore it is more important that your FICO scores always have a positive bending.
In fact the lenders are more concerned about the usage manner of the credit card than the number of cards. If you have many credit cards but use it well with no defaults and borrowing, then the effects may not be noticeable. Therefore there can be no specified rules as to what extent your credit score may be affected. In case you want to close down some of your accounts then it is better to close the recent ones. The effects with new accounts are much less than the accounts those are old.
The best way to restore them is to leave them open and not borrow against them. The accounts get back on track with time if you have no defaults on your account. If at all you are in a severe situation and want to settle credit card debt for your accounts then you can easily do so with the help of a reputed debt settlement company. The company usually appoints debt attorneys who work with your creditors to get your debts settled so that you get the best possible deal.
You should always try to figure out the difference between the amount that is available for borrowing and the amount you owe. This keep you informed about your current financial status. The next step is to calculate the difference. If the difference is below ten percent then your scores will shoot up regardless of the number of accounts you have open. There are again few more factors that you can consider:- One of these is the capacity to which the credit card is used. It is also known as the utilization ratio. If there are a number of cards then it means that the availability of credit is more. If you are maxed out on all your cards, that would hamper your score certainly. The prudent utilization of the cards depends upon an individual’s consideration and therefore cannot be predicted. The other is the length of credit history and past credit applications. This caters to the fact that not only the length of your oldest account matters but also the average age of all your accounts matter as well.
If you keep on opening new credit lines your credit score is bound to get hampered. If you can balance them with your older cards then you can easily balance your average and your credit score as well. The best way suggested is that if you already possess quite a number of credit cards; try to carry them forward without any borrowings. Adding another new credit card would only add to your woes. In these circumstances opting for credit card debt settlement will be fruitful as it will reduce your debt amount and also the rate of interest. On a whole the process will help you save quite a few dollars by reducing your original debt amount. Sometimes even having a certain number of cards acts as an advantage as the credit availability is more.
Closing them down is advisable only when it is profitable to do so. It is advisable that you limit to about 3-5 credit cards per rolling 6-month period and avoid any debts on that accounts. If you are not in debts your scores can be excellent no matter how many cards you have. It is just that when you have too many cards in your possession the temptation to buy more can prove disastrous. But the fact that having too many credit cards by itself lowers your credit scores has no specified groundings as of yet. Therefore there is no reason that you hack your brain for a solution. The solution is pretty simple. You just need to handle it the right way in order to procure the best results.