I learned a pretty hard lesson recently. LetÂ me give you some credit card education!Â When I was in college 6 years ago (has it really been that long?!) I had a ton of credit cards.Â I was using them to pay for books each semester and to pay the difference in what my meager savings and college loans wasn’t covering for tuition.Â I’m talking about $11,000 over the four years I was in schoolÂ in credit card debt, and all before I graduated from college.
Since then, I’ve managed to pay them all off (YAY me!) and I called up each account and closed them, one by one.Â I was thinking, I’m not going to get into credit card debt anymore, and I’m going to free myself right now by closing out these accounts!
So wasn’t I a little surprised when.. just recently, 6 years after I graduated college I get a copy of my credit report to find my score dropped by about 30 points.Â It’s not because I had late payments on there- because I didn’t.Â MyÂ lower credit score was based on the fact that I:
- had a short credit history, as I only had 1 revolving account since I graduated college.
- was using almost all of my available credit, since I had only that 1 revolving account with credit available to me (even tho the balance was only about $400 total owed, it was killing me because the available credit I had was only $800 at the time
So.Â Even if you are working to get out of debt- don’t make the same mistake and go around closing all of your accounts once they’re paid off.Â You can NOT use the cards (and even shred them to make sure you don’t!) but you really should just leave most of those accounts open and watch in amazement as your credit score increases!