Too Many Bank or National Revolving Accounts |
By Kenneth Long on May 21, 2010
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Sometimes credit may be withheld when an applicant has too many bank or national revolving accounts. To clarify, the accounts must be open in order to contribute to this reason for credit denial.
If you have received this reason code on a credit report, or have been told that this is an issue by a mortgage representative, you can relax. This just might be the easiest credit issue to fix.
All you have to do is to contact one of your credit card issuers and request that they close the account. Of course, the balance must be zero for the issuer to be able to close the account.
Choosing the right account to close is essential to make sure that you don't inadvertently cause more harm than good. The account that you select to close should match several of these guidelines:
- Zero balance. Creditors can inactivate a card at any time but cannot close the account until the balance hits zero.
- Recently opened account. Any account opened within the last two years provides minimal benefit to your credit score, since duration contributes 15% towards the credit scoring formula.
- Rarely used. An account that is rarely used may be closed due to inactivity anyways, so this could be a good target for closure.
- Poor terms. An account that has a high interest rate, no rewards and an annual fee should be tops on your list for closure.
- Other revolving accounts should have no or low debt balances. If you close a line of credit and have substantial debt on your other revolving accounts, then your credit utilization rate will skyrocket and cause severe damage to your credit score.
While it is true that having too many revolving accounts can interfere with approval of a mortgage or major credit account, there is generally no benefit to closing accounts until your prospective lender advises you to do so. If they want you to close an account, then feel free to do so to satisfy their request.
Closing accounts early just because you believe that you might have too many revolving accounts may be foolish. This has been confirmed by Fair Isaac spokesman Craig Watts.
Closing accounts to prevent this error reason should generally be done only in response to a specific request from a lender that you are applying with. Otherwise, you may end up causing much more harm than good.
Join the Discussion at the Credit Forum: Too many bank or national revolving accounts
Too many bank or national revolving accounts is Code 4 on Equifax and Experian credit scoring products. TransUnion does not factor this code in its scoring products. It is Code T2 on NextGen scores. For more information about credit scoring, see the complete list of credit score factors.
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