Q: I have 6 major credit cards and several department store credit cards. I want to close some of these cards but don’t want to hurt my FICO credit score of 700  – 720. Should I close the newest cards and keep the cards that are the oldest?

A: If those major credit cards are costing you money, in terms of high annual fees, then you might consider gradually closing two or three of them over a one-to-two year period. But if they’re not costing you money, then I’d strongly recommend that you just keep the cards open and simply stop using them if you have no need for them.

The reason you should not close those cards – nor close your department store cards – is that you will lower your available credit, which is a factor in determining your FICO score. Additionally, those cards are helping to establish the length of your credit history, another component of your credit score. Read the following article for information about how your credit scores are calculated and tips on boosting your FICO scores.

There is a lot of misinformation about what goes into your credit score. However, Fair Isaac officials have said many times that this is the heart of what happens: Your credit files – currently those from Equifax and TransUnion – are reviewed. Certain information (roughly 22 items) about how you’ve managed your credit is statistically analyzed.

Ultimately, five different categories are weighted to produce your FICO score. Here is the breakdown of those five areas that contribute to your FICO score:

The Formula That Governs Your FICO Score

1.    Payment History: Approximately 35% of your score is based on this category.
2.    Amounts Owed: About 30% of your score is based on this category.
3.    Length of Credit History: Roughly 15% of your score is based on this category.
4.    New Credit: Around 10% of your score is based on this category.
5.    Types of Credit in Use: About 10% of your credit score is based on this category.

Based on this information, as well as other advice FICO freely disseminates on its website (http://www.myfico.com) and elsewhere, you can draw some good general conclusions about what actions can help your credit – and what could hurt it. For example, to increase your credit scores:

• Pay Your Bills on Time
• Payment track record is the largest component of your FICO score
• Even if you must make “minimum” payments, do it!
• One late payment can drop your FICO score by 60 to 110 points
• Maintain Low Credit Card Balances
• Don’t “max out” any cards
• Try to not to use up too much of your available credit limit
• Spread out debt over several cards instead of carrying big balances
• Keep Your Older, Established Accounts Open
• Longer credit history is scored favorably
• Resist the urge to close an account when you pay it off
• Closing accounts can sometimes lower your FICO credit scores