Even SAVVIER consumers know that knowing your own credit score doesn't matter. Knowing what problems appear on your credit report and how to fix them is what matters. The number is just a number, so don't waste your time or money on it.

I wouldn't go so far as to say that it's a good technique to raise your FICO score, but depending on what happened before you filed (e.g. if your creditors have already written off your debts and thus your FICO score has already absorbed those hits) sometimes a bankruptcy filing does, in fact, raise a score.

1) What is the debt usage? What is the availability on a credit card vs. the actual credit limit. In this economy we see a lot of people trying to hold their heads above water but when an applicant has a credit card for $25,000 and it's maxed out at $24,500 - They are high risk customers. If all, or majority of their open trades (credit lines) have little usage left - as a bank we assume they are high risk because they have exhausted all of their funds. Even if a person's credit report shows absolutely no late pays at all, if they are maxed out on their debt - this WILL bring a score down and prevent future loans until the debt is controlled.

2) Length of time accounts have been open. We aren't looking at installment loans but rather revolving lines of credit (ie. credit cards). The older the card(s), the better. It doesn't matter how many trades there are (as long as they aren't maxed out), the older the card, the better. I have a credit card that I haven't used since 1999 but it is still open with a zero balance and this alone will drastically increase one's FICO score. The more credit cards that are "aged" with little or no balances is actually good for your credit. DO NOT close any trades that are older as this alone will decrease the credit score.

3) New(er) credit. Yes, it is good to have established and open trades but when a person goes out and receives 5 credit cards at once it looks as though they cannot manage their personal funds and have to rely on credit cards. The best thing to do is apply for credit over a long period of time (several months or even a year). Overall, when a person opens several new accounts at once it decreases the credit score instead of increasing it. Over a period of time the credit score will increase but it may take at least a year for it to rebound.

4) Credit inquiries. This is one of the worst things to effect a credit score. When someone goes out to buy a car and "shops" around for rates or the best loan terms - each time your credit report is pulled it can decease your overall score by up to 7 points. Most dealerships will have you credit pulled by different institutions at least 5 times which means your score just decreased AT LEAST 35 points. While 35 points may not seem like a huge deal, it can make or break whether an institution will grant you a loan. Most banks grade their customers on the credit reports with A1 through A5 customers (A1 being the absolute best) and D credit grades. If one is considered D credit we automatically decline the customer because the consumer has a history (per the credit system) of not repaying his/her bills.

5) As messed up as this is going to sound - it is actually better per the FICO scoring system to have a foreclosure or repossession than to have a charge off/collection or profit and loss write off. It makes no sense... One would think it would be better to have a $500 credit card go into collection than to have a vehicle repossessed or unfortunately in this current ecomony, a home foreclosed because at the end of the day, the bank loses far more money on the latter mentioned. However, the credit system looks at it like this... People will do anything and everything they can not to have their personal items (car/home) taken away. Either way it's a lose - lose situation because in the process of being foreclosed on most people default on all of their other bills.

I hope this information helps. The credit scoring system makes no sense! It's time for an overhaul of the scoring to put people more within guidelines of the reality in our current economy. Good luck everyone!

So since they report these things around the monthly closing time you should avoid having any high charges still on the books by that date if you pay in full each month? By say... making 2 payments per month?

This part needs to be explained better, because, as the article says, it is very frequently misunderstood. It is the balance that is reported to the CRAs each month that is important in determining utilization for FICO scoring purposes. Creditors will usually report only once per month, on a schedule fixed by them - and that reporting date is usually the same as the statement closing date, so what gets reported is the balance on your statement. So if your card has a $2000 limit and you're using most of that limit every month, regardless of the fact that you pay it off each month as soon as you receive the statement, it's going to be reported to the CRAs that you're pretty much maxed out each month. And having a card report as being maxed out will KILL your credit scores.

So yes, the percentage used is important for the metric, but consumers need to know how/when that percentage is reported to the credit bureaus, or that knowledge won't help them. For FICO purposes, it makes no difference whether you pay what you owe each month or are just getting by paying the minimums - it's the balance that reports (which is in the vast majority of cases the balance that appears on your card statement) and the % utilization (of the individual card limit and your overall available credit) that it represents that matters.

It makes perfect sense for the banks. They have you by the balls because if you try to leave them, you lose the ability to easily or cheaply move to a competitor.

Am I mistaken in assuming that Fair Isaac gets most of their revenues directly or indirectly from banks?

It makes perfect sense that the system they create would give power to their customers at the expense of everyone else.

As CapitalOne told it to me, my limit would be removed, account would be closed at customer request and I would have until its payed off with minimum payments to pay it off (so forever). So with this card since I have a $3000 balance of a $5100 limit, and another card that is $2175 of $3000. my new utilization would be $5175 of $300 limit. That's going to be bad, eh?

the more I learn about how FICO score is calculated, the more it seems very stupid to me. things like cancelling a card should never hurt your score. cards lowering their limits should never hurt your score. The only thing that should matter is how much you owe, whether you pay on time, and the history of doing those 2 things. i have paid credit cards ontime and in full for 10 years, paid off a 3 year car loan in 2 so it boggles my mind that i would take a hit for simply cancelling a card i no longer want or use.

if i have a card that charges me an annual fee just to have it, there's no way i'm keeping it if, for whatever reason, i don't use that card anymore.

If I have a lot of cards with a total credit limit of $50K, does that make me look good or bad? Some say good - if I spend $1K, I've only used a tiny fraction of my total credit lines. Some say bad - having the ability to spend $50K makes me a poor risk for taking out a loan, because I could add $50K of debt to whatever amount the loan was. So, which is it?

Then there's the corollary. If I close a card, some say it's bad - it lowers my total credit line, and therefore whatever balance I have is a larger percent of that credit line. Some say good - I have less potential debt, and therefore am a better risk. Again, which is it?

This is important: I'm not being snarky or argumentative. I would really like to know (and I know I'm not the only one).

There is tons of conflicting advice about this, and the advice that is the most logical is to keep the oldest credit card and the best one and cancel the rest. And if you're planning on getting a loan, cancel everything at least a year beforehand.

If you want to argue that you would have been tempted to spend beyond your means by leaving those accounts active, that's fine, but you did not help your credit score in any way by canceling the accounts.

why close them? if you have them, what do you gain from losing credit lines? Except access to credit when you need it.

You have no way of knowing why you score went up 100 points in one year.

It could be that you got moved to a different buck. IE people with 1 or 2 cards. And in that group your score was much higher.

The biggest way to grow your score is time. Closing accounts gives you nothing.

As for the article.

Its better to have that 250 over 2 accounts. (125 each) vs 250 on one account. Your per card utilization matters as well.

In your example one card is using 50% of its credit, which could be a red flag.

Don't cancel credit cards? Do cancel credit cards? It all depends on how you're using them. There's such a thing as too little utilization, and too much available credit. If you have 10 credit cards totaling a $40,000 limit but you never carry a balance over, say, $300, you should cancel all of them except for the oldest one and the one that carries the best benefits.

When you cancel a credit card, your score immediately gets hit, but it also rebounds fairly quickly if you stay responsible. That's what people need to get over - just because your score goes down doesn't mean it stays that way. When I graduated college I canceled about 9 cards in one fell swoop and my score had went up 100 points within a year. 100 points higher than from before I canceled them. If you have a ton of accounts sitting open and doing nothing, CLOSE THEM.