If you have debt, closing a credit card account seems like it would be the smart thing to do. But sometimes, it’s not. Why? Because closing credit card accounts can hurt you credit score.
For the final blog in our Credit Countdown to 2018 series, here are two reasons why closing credit card accounts can bring down your score:
- History – If you have to close an account, try to avoid closing the oldest ones. Why? Because the longer an account has been opened, the better it is for your credit score.
- Utilization Rate – Utilization rate is the percentage of available credit you use, versus the amount you have available, and it accounts for 30% of your credit score. It’s better to have more credit available and use less credit, so closing a credit card account can hurt your score.
Because closing credit accounts can hurt your score, remember to think about your history and utilization rate before you start closing them. Also, if you are one of the 100 million Americans paying rent, solutions like RentReporters can help you build and improve your credit score by reporting your on time rent payments to TransUnion.
Get ready for 2018 the right way by taking control of your credit today.
For more information on RentReporters, visit here.