Open Credit Accounts Can Lower Your Credit Score

Many times, if you apply for a store charge card

, that store will give you big price deductions off of many of the items in their store. But beware of opening too many credit card accounts at different stores. The credit agencies keep track of all of your open accounts. After a certain number of open accounts, your credit score will begin to decrease for each additional account that you open.

This is also true for credit cards that you have applied for at the various credit card companies. The more credit card accounts that you open past a certain point, the more it negatively impacts on your credit score.

The reason for this is that any time you open a new account, it causes a new entry to be made to your credit report. So, for instance, if for some purpose, you were to open 25 credit accounts at different stores, your credit report would reflect each of these accounts. Too many accounts and your potential debt to credit ratio starts to look precarious.

Each credit reporting agency has its own internal way of book keeping. But, normally, each entry causes your credit score to lose at least a couple of points. If you have too many of these open accounts, especially in a short period of time, you may find that all of a sudden you are being denied credit.

If the amount that you owe on your credit card is close to its limit, avoid opening a new account. Instead, contact your card company and see if you can increase the credit on one or more of your existing credit cards. As mentioned before, opening a new account can possibly have a detrimental effect on your credit score.

If you increase your credit limit on a card that you already have, your credit score is not likely to be affected that much. Furthermore, the fewer lines of credit that you maintain open at any one time the easier it is to keep track of your credit. This helps you to avoid the problems that many people have with losing control of their credit card debts.

There are times when it can be extremely difficult to resist opening up a new credit account or credit line. After all, credit card companies make hundreds of millions of dollars off of their customers. As a result they are experts at coming up with all sorts of irresistible incentives to tempt you to temporarily take leave of your senses and sign up for their new card. But, it is never too late to correct your mistake.

Take inventory of your stash of credit cards and make an effort to get rid of all of those that you don't really use or need. But don't simply cut them in half. In addition, contact the card company and formally cancel it. This way, your cancellation will actually be reflected on your credit report.

Open Credit Accounts Can Lower Your Credit Score

By: Susanna Berlatsky

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