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RE: How to build good credit - Learn what goes into your credit report

in #money8 years ago

I was always under the impression that opening and closing lots of accounts hurt your credit score.. What about not using cards at all or only putting a few dollars on them a month? Does that hurt it?

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Opening accounts hurts in the short term, but keeping them open for longer helps. Any account open for more than 2 years is probably bringing your score up. But closing accounts hurts, since that average age of credit goes down. Other than that, if it's an account you only opened recently, closing it will probably bring your score up. The hard-pulls on your credit report as a result of opening accounts hurt, though. They disappear after 1 or 2 years though, so in the long-term it's worth opening a lot of cards as early as possible.

Not using ANY cards hurts, if you have a $0 balance over all cards. However, even a penny or $1 balance on ANY card helps more than having too much utilization.

Because of high interest rates on credit card products, I'd recommend paying off your balances on all cards in full every month, if you can, but also making sure to make at least one purchase on one card (you can pick your favorite) each month. Debit cards don't count, since they draw from your bank account and aren't using credit.