As more people are being affected by the recent credit crunch the value of a high FICO credit score is becoming immeasurable. The higher an individual's credit score, the better opportunities (meaning lower interest rates) he/she will have to secure a mortgage, get a home equity line of credit, or an auto loan. One key factor in establishing and maintaining a good credit history is by having a long-standing line of credit.
Sometimes called "Golden Accounts," a credit line with 10 years or more of positive history can positively influence the FICO score to be raised. Even if the old time account is no longer your main source of purchasing, it is important to keep it open, active and use it at least every six months to keep it "golden."
A credit utilization ratio is the rate of the total available credit versus the amount that is actually in debt, such as charges or financing at any given time. Experts advise that consumers should only use about 10%-30% of their available credit to keep their FICO scores high. By closing charge accounts, even those that are no longer in use, consumers risk increasing their ratio and consequently reducing their credit scores.
Even individuals who feel like they have too much credit in the guise of multiple charge cards, should try to keep them all in good standing. Closing accounts can lead to a reduction in one's credit utilization ratio, which accounts for about 30% of one's FICO score.
The good news about the turn of economic events is that many of the "secret recipes" that determine a consumers value is being released. Now since the value of long-term accounts is common knowledge, people can start taking steps to positively building or reshaping their credit history.
