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Credit Scoring Explained – Part 3 of 5

Somehow, the credit bureaus have decided that the average age of your accounts and the length of time you have had credit should account for 15% of your credit score.

What this means is simply that the longer you have credit, the better chance there is that you can have a good score. It also means that the longer your average account has been open, the better your chance of having a good score.

Since part of this factor includes your average age of account, opening new accounts and closing old ones will adversely affect your score. This tells you right away that closing old accounts can be a bad idea.

Of course, there are accounts that you have no control over such as car loans and mortgages or other installment loans. When these loans are paid off, they are closed by the creditor. But credit cards are a different story.

Often, people decide that they should close credit card accounts because they don’t use the card anymore or because they have a better one with a lower rate. Sometimes, accounts get closed because the consumer gets mad at the creditor and decides they don’t want to deal with them anymore.

Regardless of whether the emotions toward the credit card company are justified, it is important to consider all factors before closing an account. Taking action because you are unhappy with a creditor may cause you more problems than it will solve.

For more information about credit, you can find my book, Crack The Credit Code, To Play The Game, You Need To Know The Rules which is available on Amazon. Or, go to my website, CrackMyCredit.com.

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