Managing your credit score Ask Dr. Don by Don Taylor, Ph.D., CFA • Bankrate.com

Dear Dr. Don,
My credit score is pretty good, but I would like it to be better. I am only 26, so my accounts have not been open for very long, which according to the report, is the main reason my credit score is where it is.

Recently, I decided that I want to open a new credit card account because it offers cash back. I opened the credit card, but I haven't closed the old account, which I will probably not use now that I have the new one. I do not carry all of my credit cards with me. In fact, I have way too many credit cards, but I only carry one with me.

Last fall and last Christmas season, I opened several store accounts so I could get the discount for opening the account. I have only used one of the cards since then, but that card doesn't offer too many benefits or discounts, so I don't think I'll be doing that more than once or twice a year. I even have two other Visa cards, the one I don't use from the last time I switched cards and the card from switching this time. I have no outstanding debt on any of these accounts, and I pay off my balance every month.

I've heard that, down the line, it is a good idea to close these accounts that I don't use to make it easier to buy a house or other big item, so that I don't have the ability to create a large debt quickly. However, I've also read that it looks really bad to close a bunch of accounts all at once. I want to start closing these accounts that I don't use, but I don't know the appropriate way to space it out.

If it helps to answer the question, I also have a $20,000 student loan and a car loan to pay off.

Thanks so much for your help! -- Meredith Multiplet

Dear Meredith,
When you request a credit score, the credit bureau will list several reasons why you earned the score that they gave you. You could have a stellar credit score and will still get the same number of reasons listed with the credit score.

Every time you apply for credit it shows up as a credit inquiry on your credit report. This is called a hard inquiry because you are actually applying for credit. A hard inquiry stays on your credit report for three years.

A soft inquiry is when a lender requests your credit report either prior to sending you an offer to extend credit or to monitor an existing credit relationship. Requesting your own credit report also results in a soft inquiry. Soft inquiries don't affect your credit score. The Bankrate feature, "25 need-to-know credit-scoring terms," has more credit-scoring terms.

You're correct in your understanding that the ratio of balances outstanding to credit available impacts your credit score in two important ways. Lenders don't like to approve credit applications by consumers who have maxed out their current credit sources but also have to consider the possibility that an applicant, with a large pool of credit available, will tap that credit resulting in larger monthly bills and a reduced ability to pay those bills. According to myFICO.com, closing accounts isn't a good short-term strategy to raise your credit score. The following is also from the myFICO.com Web site:

There are five types of information used to calculate a FICO score at any given point in time. Each type of information counts as a percentage of a total FICO score:

These percentages are based on the importance of the five categories for the general population. For particular groups, such as people with relatively short credit histories, the importance of the categories may differ.

Getting a car loan or a mortgage is a little bit different from applying for a credit card, because car loans and mortgages are secured credits, meaning that the lender uses the car or the mortgage as security against the possibility that you don't pay the debt.

If you're not currently in the market for a house or a car, then go ahead and pare back a couple of these credit cards. Choose the ones where you don't like the terms or don't like the stores. The Bankrate feature, "Closing your account," will walk you through the right way to close a credit card.