MYTH: Getting Rid Of Old Credit Cards Boosts Your Credit Rating
FACT: While you might imagine there’s a national system which sets your credit rating for life, the experts say this is simply not true – in fact, every lender scores you differently. “The processes they use to determine your credit score vary, and it’s not always the case that closing old cards will help,” warns the Money Matters team. “It depends on your own personal circumstances, but long-standing accounts with good histories can be beneficial to your score – and closing an old card can actually reduce your available credit, which in turn increases the share of available credit used, thus potentially harming your score.” You might not be aware that credit scoring depends greatly on trying to predict your future behaviour, too. “While a poor credit history will invariably count against you, having little credit history at all makes you an unknown quantity – and therefore a potential risk in lenders’ eyes,” adds the Money Matters team.