Two of the top things that can affect your credit score negatively and are big credit mistakes include not paying the minimum amount due every month and closing a credit card, especially one with a balance. You will not increase your credit score by closing your credit cards, so put them back in your wallet and pay off those balances.
Credit Card Balance
When you close any credit card you no longer have available credit from that card. But when you close a credit card with a balance and no longer have available credit, it shows up on your credit report as if you maxed out your credit card.
When you have available credit that you aren't using, you're less risky when you apply for loans or other credit cards and your credit score goes up. For example, if you have a credit card with a $5,000 limit and you've racked up $2,500 worth of credit on it, you're utilization is at 50 percent. If you have a second credit card with a $5,000 limit with no current charges, then your utilization is at 25 percent. If you close either of those credit cards, your utilization will go up and your credit score will go down.
Credit Report
Most of your credit accounts are wiped off of your credit report if there is no activity for seven years. However, your credit card accounts will not be erased if you keep them open. According to credit.com, when you close the account, your date of last activity starts and the credit account will eventually be permanently removed from your credit reports.
You may wonder why it matters that your account stays open. You don't want your good credit history to disappear, so continue to make your monthly payments to pay off your balance and keep the account open. The more good history on the report, the better your credit score, which is also known as FICO score. If this is your oldest credit card, one with the longest history, you should keep it open.
Use the Card
If you keep the account open but never use the card, the credit card company could end up closing your account. Once you've paid off the balance, ensure that your account doesn't get closed by paying for groceries every week on one of your credit cards and paying off the bill as soon as you receive it, so you're not paying interest on your groceries.
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