10 Ways You Think You’re Helping Your Credit But Are Actually Hurting It

Closing old credit cards you’re no longer using

While it may seem logical that you should close some of the old credit cards you no longer use, the opposite is true. One of the factors that determine your credit score is your length of credit history. If you close an old credit card, your credit history becomes much shorter, which can affect your score.

Additionally, closing a credit card reduces your available credit, which is another criterion used to calculate your score. Having less available credit will increase your credit utilization rate.

For example, if you have an old credit card with a $5,000 limit and a new card with a $2,000 limit, your total available credit is $7,000. If you have a $1,000 balance on the new card, your credit utilization rate is roughly 14 percent. However, if you close the old credit card, your rate will shoot up to 50 percent.