How The Credit Reporting Companies Handle Open Credit Accounts

Susanna Berlatsky

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. Even so, you should be wary of opening too many credit card accounts at a lot of stores. The credit agencies continually track all of your open accounts. After you have reached a certain number of open accounts, for each additional account that you open,your credit score will decrease a bit.

In addition, this is true for credit cards that you have applied for at the various credit card companies. The more credit card accounts that you open up to a certain point, the more it ultimately 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 up twenty-five credit accounts at various stores around the city, entries in your credit report would reflect your credit balances at each of these accounts. If your report starts to show too many accounts, lenders begin to question your debt to credit.

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. And, if you possess too many of these newly open accounts, especially in a short period of time, you may find yourself wondering why you are inexplicably being turned down for credit applications.

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 limit on one or more of your existing credit cards. As mentioned before, opening a new account can possibly have a negative effect on your credit score. Not so with an existing account.

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 simpler it is to monitor your credit expenditures. This also helps you to prevent the problems that many people have – 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 from their customers each year. And, as you might expect, they are pretty much experts at dreaming up all sorts of irresistible incentives to tempt you of temporarily taking leave of your senses and signing up for their latest card. But, it is never too late to fix your error.

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 to cutting them in half, contact the card company directly and formally cancel the card. This way, your cancellation will actually be reflected in your new credit score.

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