Save Your Credit Credit Score
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So, you are trying to fix your credit score and you have stopped charging on your credit cards. You figure this is the smart thing to do because you don't want to get in any more debt, and you may in fact have some credit cards now with zero balance, which you never use.
If this happens you are quite likely to get a phone call or letter from the issuer of the credit card telling you that they are going to cancel your line of credit with them because you are not using the credit card.
This may sound like a great idea to you - but not so fast!
This will, in fact, hurt your credit score.
Yes, it sounds ridiculous. But here's why - credit card companies WANT to see that you have available credit.
If you close down a credit card, or if a bank or credit card company does it for you, you have less available credit.
This affects your credit utilization score. This is the amount of credit that you have available to you. Banks generally like to see people use 30 to 35 percent of their available credit - no more than that.
The best thing to do if your credit card company wants to cancel the card is call them and tell them you will start using it again. Then, charge something SMALL - groceries, a tank of gas - and make sure that you pay it off completely and on time. Do that every couple of months, or every month if you can always pay the charge off. Buy something that you would have purchased anyway, not a luxury item that you will have a hard time paying off.
If it's too late and the card has been shut down, make sure that you pay down your other credit card balances as quickly as possible. This will help fix your credit utilization score, which in turn will help your overall credit score.
So, you are trying to fix your credit score and you have stopped charging on your credit cards. You figure this is the smart thing to do because you don't want to get in any more debt, and you may in fact have some credit cards now with zero balance, which you never use.
If this happens you are quite likely to get a phone call or letter from the issuer of the credit card telling you that they are going to cancel your line of credit with them because you are not using the credit card.
This may sound like a great idea to you - but not so fast!
This will, in fact, hurt your credit score.
Yes, it sounds ridiculous. But here's why - credit card companies WANT to see that you have available credit.
If you close down a credit card, or if a bank or credit card company does it for you, you have less available credit.
This affects your credit utilization score. This is the amount of credit that you have available to you. Banks generally like to see people use 30 to 35 percent of their available credit - no more than that.
The best thing to do if your credit card company wants to cancel the card is call them and tell them you will start using it again. Then, charge something SMALL - groceries, a tank of gas - and make sure that you pay it off completely and on time. Do that every couple of months, or every month if you can always pay the charge off. Buy something that you would have purchased anyway, not a luxury item that you will have a hard time paying off.
If it's too late and the card has been shut down, make sure that you pay down your other credit card balances as quickly as possible. This will help fix your credit utilization score, which in turn will help your overall credit score.
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