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Dave Ramsey

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Good vs. Bad Credit

Reading a credit report can seem like reading hieroglyphics at the pyramids. Part of the challenge lies in understanding exactly what lenders want to see when they check out your credit history.

One big question on the minds of those who want to reduce their debt  and improve credit is “Should I close credit accounts that have been paid off or that I no longer use?” The answer is probably not, according to experts.

If your account is in good standing—meaning you paid it regularly and on time—leaving it open is a better predictor of creditworthiness in the minds of lenders, because your credit score will be higher. From their point of view, having available credit is a measure of your ability to pay it back.

Be aware, however, that if you’re hoping to remove a blemish from your credit report by closing an account that wasn’t in good standing, it will be awhile before it becomes history. Closed accounts remain on your credit report for ten years, and any negative history lingers for seven years.

As always, the best way to improve credit is to keep balances low, and pay them off on time. [Kiplingers]

Posted: 4/23/08

I too have heard that you should keep a line of credit open on which you have good history, to show longevity. It's hard to know exactly what open accounts will benefit you, but in general the best thing is probably to use as little as possible and pay on time, every time.

  • By kristen
  • on 4/28/08 1:15 PM EST

Should you close accounts that you've paid off and seldom or never use? I was told that you should keep your oldest account open, even at a zero balance, because it show credit longevity.


This is so terribly true.However, check your free credit report that you are entitled to. If there are discrepencies let them know. All three of them, Equifax, Experian, and Trans Union. I woked for one of the three for 10 yrs so I know. Keep after them to make sure that they remove old accounts and info that is no longer needed on. Make sure you check to see if someone is looking at your credit also. You can put a hold on them so that whoever wants to look at them they have to have your permission, which is a good idea. The only bad thing is it can delay, but at least you will know who is looking at your credit scores. The more inquiries that are put on your bureau it lowers your credit rating. If you have a comment about something on there you are allowed to add a comment to all items listed on there. MOST IMPORTANT OF ALL!!!! Keep after them if they do not remove information that should not be on there. Especialy TA (not mentioning any names). Credit bureaus are suppose to be updated every 30 days by the bureaus, so make sure that this is being done. Pay your mortgage on time always. This is one of the most important items that credit card companies, auto loans, etc. look at. Also pay your auto loans, this can affect your credit score also.

The key thing to remember is do not get to many credit cards either because this will look like you are just juggling around. Try and pay your balance every month this will also help boost your credit score.