When it comes to maintaining good credit, there are a lot of different ideas and recommendations you could follow. And one would naturally expect that all good financial habits and principles will result in good credit. However, that isn’t always the case. This article by Kristin Wong suggests that some of your good money habits might actually be hurting your credit.
For example, it may be considered a good financial move to not use credit cards at all. While credit cards can be risky, particularly if you aren’t making payments in full and on time, not using credit at all can hinder your ability to build a good credit history.
Another example: closing out an old credit card. In some cases, you may be tempted to completely close out a credit account, particularly if you have just gotten done paying off a large amount of debt on the card. However, 15% of your credit score actually depends on the length of your credit history. If you close out a card that you have had for several years, then you lose the long-standing history you had with that card as well as the available credit that contributes to your utilization ratio.
While credit cards can definitely get you in trouble if not managed correctly, they can also work as a strong financial tool if you use them the right way and don’t get caught in a debt trap.
The article discusses other financial moves that might end up hurting your credit. Check it out and see what areas you can improve to help build a good credit history.