My friend tell to me about his financial problems. He told to me if their parents have a lot of debt to the bank. After my friend tell me, I doubt to apply loan to the bank.

When applying for a mortgage loan, you might hear your lender say that you have too many accounts open and that closing some of them will help strengthen your credit score. So you might think, I guess I could do without some of my older accounts when, truth is, closing some of those aged accounts might hurt your score rather than help.

Credit scoring actually benefits you when you use it wisely. Paying your bills on time and not racking up large balances on your cards will naturally not hurt your score. Having a bunch of unused lines of credit will. The key is to use available credit in moderation and being responsible with those cards over a measure of time.

Two reasons why closing your accounts could negatively affect your score is as follows:

When you close older accounts, the ones you have left will make it appear that your credit history is younger than it is in reality. So if you go and apply for a mortgage and someone says the loan is contingent upon you closing some of your accounts, be sure to close more recent cards rather than the ones you’ve had for some time. Again, closing more aged accounts will hurt your score.

When you close credit accounts, your available amount of credit will be reduced and the percentage of debt used vs. available credit will rise dramatically. This will make you appear to be a credit risk driving your credit down. Lenders refer to this figure as a debt utilization ratio, which is looked at closely.

Say you have $600 of outstanding charges on your credit cards. You have 3 credit cards with $2000 worth of credit limit on them which totals $6000 of available credit. This would put your debt utilization ratio at 10% (600/6000). Keeping your debt use at 10% or lower of available credit will result in your best credit score.

Now suppose you are asked by your lender to close one of those accounts. Your credit limit would then be a total of $4000 increasing your debt utilization ratio to 15%(600/4000). This would likely result in your credit score dropping if everything else on your credit history didn’t change.

So if you are asked to close some of your credit lines in order to qualify for a mortgage, go ahead and do so, just go about it carefully. Close the newest accounts and keep older ones open. It’s still likely that your score will drop down, but only for a short time. You can bring the score back up by paying down existing debt after closing on the mortgage, reducing your debt utilization ratio.

This is easier said then done, but getting yourself into the practice of paying off your balance in full each month and not carrying over any debt is really the best way to drive your credit score high. Your financial situation will then be healthier overall.

Since credit can be a serious addiction, you may consider closing some of your credit cards if you tend to make unwise decisions with them. Some tend to max out card after card. Not only will that cause you financial hardships, but it will cause your credit score to plummet drastically.