While it’s important to have and use credit to keep your credit score in good shape, you have to also make sure you’re on top of your open lines of credit. With all of the transactions and bills we pay online these days, it’s easy to lose track of which things you auto-pay on which cards. As opposed to closing a line of credit, people often will keep a card they don’t use and, therefore, don’t monitor. However, it’s easy to forget an annual payment and that could end you up in real trouble. Your credit score is affected by any late payments and the more delinquent the payment, the worse it is for your score.
It may make sense to keep a card you don’t use often, but you really should be using a little bit of every line of credit you have and pay it off monthly to optimize your credit score. Hunter Church from Prosperity Home Mortgage says that the sweet spot for credit utilization is 30% per card. If you think you having been doing all the right things, but your score hasn’t gotten where you want it, this could be the kicker. Give it a try and report back to me!