of your score is determined by the length of time you've held a credit
relationship. Don't close any accounts if you plan to shop for a mortgage
or other loan for which you'll need a good score. Opening new cards and
closing old accounts negatively impact your credit score in the short
run, so avoid making these moves shortly before applying for a large loan.
Deciding when to close an account is a tough question, says McClary. "It
depends on the overall mix of credit and how many accounts you close.
I would stagger it out. Put as much time between those events as possible,
because it will affect financing terms," he says.
While you'll want to have a couple of cards to
develop a credit history, adding more credit card debt can be a dangerous
thing, McClary cautions. "Limit the amount you get to two and keep balances
low and pay them off quickly. It's not necessary to have more than a
couple of credit cards, and be careful using them because life circumstances
can change." Of equal importance is establishing a savings account to
fall back upon.
Tip: Listen to this 60-second tip, "Cancel a card, hurt your score."