The thing people keep missing about credit utilization

I see so many posts on here where people obsess over paying off their cards and then closing them. That's the big mistake. I did the same thing a few years back, thought closing a card would make my credit look cleaner. Instead my score dropped 40 points because my total available credit took a hit. Utilization is 30% of your score and closing accounts just shrinks the pool. Now I keep cards I don't use open with a tiny monthly charge like Netflix just to keep them active. My score went from 680 to 740 in about 8 months by doing that and paying down balances. Has anyone else noticed their score improving after they stopped closing old accounts?

2 comments

2 Comments

patricia_singh814d agoMost Upvoted

Did you run the numbers to see exactly how much your utilization percentage dropped from keeping those old cards open? Curious if it was the credit mix helping or just the lower ratio.

lily_stone763d ago

Yeah same thing happened to me, I learned that lesson the hard way too. Kept a bunch of old store cards open even though I never use them and it really helped my score bounce back. Glad it worked out for you too, that 40 point drop was brutal.