Managing your credit card and finances with your credit can sometimes be a little tricky. At Credit Law Center, we often see clients close old credit cards because they have a higher interest rate, where this can make financial sense it isn’t always the best thing for your credit scores. When determining whether or not you should close an older credit card is what you need to consider:
Your Credit Score consist of 5 areas that are used to determine your FICO scores:
35% Payment History
30% Debt Ratio
15% Length of Credit
10% Mix of Credit
When closing a credit card it can potentially affect several of these areas such as taking your available credit limit out of your Debt Ratio or stopping a long standing payment history and affecting your length of credit. Our recommendation is to leave your cards open and use them every 3 to 6 months for a small purchase then pay it off before you charged interest. This will keep your credit cards active and may help improve your credit scores!
Contact a consultant at 1-800-994-3070.