Credit Score Boot Camp – Part 4

Manage your credit cards wisely: show your credit worthiness!

Many people make the mistake of rushing to cancel credit cards – in an effort to improve their credit score. Bad idea. High balances are the problem – and your credit score is based on your balances relative to your available credit. Those cancelled cards represented “available credit” – so cancelling them could actually hurt your score!

Ideally, you would have a few credit cards with reasonable interest rates, and you would use them regularly and pay them off promptly. Look at your credit card limits, and calculate what 30% of your limit would be. Consider that your upper spending limit and stay within it. Same goes for any lines of credit. Follow the 30% rule and stay on top of payments.

Paying down your debts to under 30% is a great way to boost your credit score. If you need to carry a balance, it’s better to be below the limit on more than one card, than at or over the limit on one card.