Home Buddies – Houston Credit Repair Coach for Investors and Homeowners

How to Create Depth for Your Credit Score

(The Revolving Account)

Many times people pay off their credit cards and close the account because they do not use it. Although this move seems to make good sense many times it will lower your credit score. We must always maintain at least one open revolving line (i.e. credit card) to maintain and/or increase our credit score.

With the Classic credit scoring model you will have “lack of recent revolving account information” if you fail to have an open revolving trade line. If you have not had an open revolving line in the past six months this will greatly raise your credit risk which will lower your score. This is because when there is no open revolving in your credit file the score model has no way to evaluate your ability to manage this type of credit.

The key with revolving is that it shows the credit scoring system our ability to manage credit. There are several ways to obtain a revolving account home; equity loan, credit card, merchant or department store account and a personal line of credit. When we maintain balances on these types of accounts it can provide depth to our credit report and raise our score because we demonstrate that we have the ability to manage credit.

So to make sure that you are not risking your credit score you should have at least one open revolving account. In addition, you should periodically use this account and pay it off over time to show the credit scoring system that you understand how to manage credit. If you do only have one open revolving account you should make sure that the card reports to all three credit bureaus so that you are sure you are building all three credit scores with the account.

Cliff Pape
Home-Buddies