WRONG

Statement #3: It is always a good idea to completely close down any unused credit accounts, especially before making a major purchase.

Answer: In fact, it is almost NEVER a good idea to close down all of your unused credit accounts before making a major purchase. Having several open and active credit accounts with small balances--or balances that are paid off monthly--can actually help your credit scores increase because they show that you can manage your monthly credit obligations responsibly.

Another compelling reason to be careful when closing unused accounts is that doing so may make it seem that you are using a much higher percentage of your available credit. For example, if you have a $1,000 balance on only one of five credit cards that each have $1,000 credit limits, you would have a credit utility ratio of 20%. That is, you are using 20% of your available credit. That is good. However, if you closed the four accounts that you were not using, your ratio jumps to 100%. That is bad. Nothing else changed in your life, but you are using a much higher percentage of your available credit. That will certainly have a negative impact on your scores.

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