There may be some important things about your credit score you might not know.
One of our viewers asks about credit cards and credit score. Credit cards have become such a part of our daily lives, we may take them for granted. Some believe it’s a good idea to eliminate as many credit cards as you can – that may not always be the right thing to do.
"Generally, closing credit cards with a closing balance could negatively impact your credit score because credit companies will look at your debt utilization," said Susan Utsugi of Central Pacific Bank.
Debt utilization – a complex phrase meaning simply that if you want to keep your credit score up, you have to use your credit. But that’s only good if you continue to make prompt payments.
"If that credit card is going to tempt you to make purchases and over extend yourself, it’s probably the best thing to do is to cut up that credit card, keep the account open, but cut up that credit card so that you’re not tempted to use it," Utsugi says.
There’s a fine line when it comes to keeping your credit score on the positive side.
"Having too many credit cards or having too much credit available could possibly affect your credit score. Depending on your overall credit history, the main thing is not how many credit cards you have available to you, but how you’re using those credit cards and the balances that you keep on those credit cards," Utsugi says.
Utsugi says the most important thing to remember is to keep your payments current – pay your bills. And be wary of those applications for new credit cards that show up in the mail.
"Don’t apply for or open new credit cards that you don’t need. Whenever you apply for credit, an inquiry is done on your credit history and numerous credit enquiries can negatively impact your credit score," she says.
If you have a question for our financial experts, e-mail us at dollarsandsense@khon2.com.
See the original article at: KHON2 Local News
