I grabbed this from a personal finance blog. It’s a good thing I don’t believe everything I read.
“I should pay off my credit cards and close them to increase my credit score.” Paying down your credit cards is an excellent idea to improve your credit score, but after the balance is paid off, do not under any means close the account. By closing the account you are essentially increasing the percentage of debt that you are using of all the debt that you have available to you, which will negatively affect your score.
We don’t use credit cards at our house and we don’t have any credit card debt. And I would certainly never keep my old credit card accounts open so that I would keep my good FICO score. You know what a FICO score is used for, don’t you? It’s used to help you go further into debt. So why the heck should I care what my FICO score is?
But green3, what if you want to buy a different house down the road and you need to have a FICO score?
First of all, I don’t plan to. But if I did, there’s this thing called manual underwriting. I know it may cost a bit more, but it doesn’t cost nearly as much as me carrying debt all my life “just in case” I need a FICO score to purchase something. Not to mention the stress that goes with having debt – it’s just not worth it.
Tonight I will be making a presentation to the school board on Dave Ramsey’s Financial Peace for the Next Generation. If your school isn’t using this curriculum, I suggest you start working on your local school board!
