Credit begets Good Credit which begets Great Credit

Canceling credit cards is a common mistake made when focusing on stronger credit. Eliminating unnecessary & unused credit lines makes good sense to those with common sense. Sadly, this can hurt your FICO score.

FICO scores are computer generated scores from some super secret proprietary algorithm. Human logic appears to be missing in the algorithm.

30% of your FICO score is created from your HISTORY. 

When you cancel that old VISA you took out in 1997 because you had some reckless spending on that card in 1998-99, the rate is 19% & you haven't used it lately - YOU LOSE FICO POINTS, because you wipe that 'historical use' right off the FICO radar. 

For those who have excellent credit, little things like that don't matter. For those working diligently to improve FICO scores, every point counts.

Keep ALL revolving credit active. Because some of us have 'too many' credit cards, it's good to create a system for using these cards every 6-12 months.

Personally, I have an excel spreadsheet listing my cards, balances, available credit, rate & such. Since I have a primary personal card & a primary business credit card (in my personal name), which is normally a zero or low balance, the spreadsheet is to help me keep the other cards ACTIVE.

When a card doesn't have activity for more than 6 months, FICO doesn't give it much weight (points). That card becomes a bit of a ghost on the radar. If you have a good history on that card, you want it to be on the radar.

FICO is looking at your ability to MANAGE CREDIT. Juggling credit cards is a huge indicator that you can manage credit.

In fact, revolving credit is the fastest, easiest way to increase your FICO scores.

I use Christmas as a time to spread my spending activity amongst a number of credit cards. Wait for the statements to come in because it's important that a balance is reported to the credit bureaus to register your activity before you pay them off.

BOTTOM LINE - keep all credit lines open and active in an effort to increase your FICO score.