Of course, if you think about it, what’s kept you from racking up big balances before now? If you’ve been pretty responsible with credit in the past, you’re likely to continue to be pretty responsible in the future. That’s the basic principle behind credit scoring: It rewards behaviors that show moderate, responsible use of credit over time, because those habits are likely to continue.

The score also punishes behavior that’s not so responsible, such as applying for a bunch of credit you don’t need. Many people with high credit scores find that one of the few marks against them is the number of credit accounts listed on their reports. When they go to get their credit scores, they’re told that one of the reasons their score isn’t even higher is that they have “too many open accounts.” Many erroneously assume they can “fix” this problem by closing accounts.

But after you’ve opened the accounts, you’ve done the damage. You can’t undo it by closing the account. You can, however, make matters worse. Closing accounts can hurt you in two ways:
• Closing accounts can make your credit history look younger than it is. Your credit score factors in the age of your oldest account and the average age of all your accounts. So closing accounts, particularly older accounts, can ding your score.
• Closing accounts reduces the total credit available to you, making your debt utilization ratio soar. Remember that the FICO formula measures the gap between the credit you use and your total credit limits. The wider the gap, the better. If you suddenly lower that limit by shutting down accounts, the gap narrows and that’s a bad thing.

This is true whether or not you keep a balance on your credit cards or pay them off in full every month. Remember: The FICO formula doesn’t differentiate between balances that are carried and those that are paid off.

How quickly you’ll reestablish credit and how much you’ll pay for it will depend largely on your behavior after you file for bankruptcy. If you start handling credit responsibly-paying your bills on time, not running up big balances, and not applying for a bunch of credit at once-your score will begin to recover.

But it also will matter which lenders you approach for credit. Most mainstream lenders shun people who have filed for bankruptcy-sometimes just for the first few years, although sometimes for as long as the bankruptcy remains on your file.
Other lenders, though, may be willing to give you a chance. Before the credit crunch, it was fairly easy for people who filed bankruptcy to get new credit.

These days, people with a bankruptcy on their record may need more patience. Far fewer lenders cater to those with troubled credit, so rebuilding credit can take more time.

A bankruptcy filing is the single worst thing you can do to your credit score. By contrast, the current FICO formula completely ignores any reference to credit counseling that might be on your credit report. Credit counseling is treated as a neutral factor, neither helping nor harming your score.

Credit counselors, in case you’re not familiar with the term, specialize in negotiating lower interest rates and working out payment plans for debtors that might otherwise file for bankruptcy. Although credit counselors might consolidate the consumer’s bills into one monthly payment, they don’t offer loans as debt consolidators door promise to eliminate or settle debts for less than the principal amount you owe.

The fact that credit counseling itself won’t affect your score does not mean, however, that enrolling in a credit counselor’s debt management plan will leave your credit unscathed.

Some lenders will report you as late just for enrolling in a debt management plan. Their reasoning is that you’re not paying them what you originally owed, so you should have to suffer some pain.

That’s not the only way you could be reported late. Not all credit counselors are created equal, and some have been accused of withholding consumer payments that were intended for creditors. The missing payments showed up as “lates” on the consumers’ credit reports, hurting their scores.

Finally, some lenders-particularly mortgage lenders do indeed view current participation in a credit counseling program as the equivalent of a Chapter 13 bankruptcy. If they see it mentioned on a credit report, they won’t extend credit as long as the notation of credit counseling remains on the borrower’s file. But typically such notations are dropped as soon as the borrow¬er completes the repayment plan. By contrast, a Chapter 13 bankruptcy can be reported for seven years or more. (A Chapter 7 bankruptcy, which involves erasing your debts rather than retiring them with a repayment plan, stays on your report for up to ten years.)

Credit counseling isn’t something you should sign up for just because you want a lower interest rate or one place to send your payments instead of many. But, if you’re behind on your debts or able to pay only the minimums, and you want an alternative to bankruptcy, you shouldn’t stay away because of myths about its long term impact on your credit.

Of course, as you know by now, many lenders never see your actual report. They’re just looking at your credit score, which couldn’t care less who closed a credit card. Fair Isaac figures that if a lender shuts down your account, it’s either for inactivity or because you defaulted. If you defaulted, that will be amply documented in the account’s history.

If it makes you feel better to contact the bureaus and ensure that accounts you closed are listed as “closed by consumer,” by all means do so. But it won’t make any difference to your credit score.

Now, it is true that to get the highest FICO scores, you need to have both revolving accounts, such as credit cards, and installment loans, such as a mortgage or car loan. And with the exception of those 0 percent rates used to push auto sales after September 11, most installment loans require paying interest.

But here’s a news flash: You don’t need to have the very highest score to get good credit. Any score over 720 or so is going to get you the best rates and terms with many lenders. Some, particularly auto and home equity lenders, reserve their best deals for those with scores over 760. You don’t have to have an 850, or even 800 score, to get great deals.

If you’re trying to improve a mediocre score, a small, affordable installment loan can help-provided that you can get approved for it and pay it off on time. But otherwise there’s no reason to get yourself into debt and pay interest.

The credit-scoring formula is designed to judge how well you handle credit over time. If you have no credit, or you don’t at least occasionally use the credit you have, the formula won’t have enough information to make an assessment. You don’t have to live in debt to get a decent score, but you do need to use credit.

In the past, some people were able to get high credit scores without having much credit. Earlier incarnations of the FICO credit score gave scores over 700 to some people with just one or two recently opened accounts. The newer versions of the formula, however, make it much tougher to get a lofty score if you have a thin credit history.

You probably need to be concerned about your score even if you have no plans to take out loans. Now that insurers are using credit information for underwriting and rating decisions, your failure to maintain a credit history could cost you in the form of higher premiums.

It’s too bad that conscientious people who simply don’t like debt should be punished with higher premiums, and some states have even banned insurers from using a lack of credit history as a reason to raise rates. If your state hasn’t prohibited the practice, though, you might want to dust off your credit card and use it once in awhile.

The folks at Fair Isaac understand your need to review your own data, which is why the FICO formula ignores any inquiries generated when you check your own reports and scores.

Where you can hurt yourself is if you ask a lender to check your score. When a lender pulls your credit, it generates what’s known as “hard” inquiry-and those are counted against your score.

As long as you order from a credit bureau or a service affiliated with a bureau, such as MyFico.com, your inquiries won’t hurt your score.