It’s important to keep old revolving accounts open, even if you are not using them. 15% of your overall credit score is determined by the length of history. If you close the accounts that you have had for a long time, you will shorten your credit history, thereby lowering your score.

30% of your score is determined by your balance to limit ratio. The higher the balances you are carrying in comparison to your credit limit, the lower your score will be. The credit bureaus recommend keeping your balance to below 30% of the total available limit. If you close accounts, you are lowering your overall credit limit, again, causing a negative effect on your score.

Banks and credit card companies are not making it easy. They have begun lowering credit card limits in the past couple of years, which has automatically made the balance-to-limit ratio higher for anyone carrying balances on their cards.

The government is putting limits on how much the banks and credit card companies can hike up their rates that will take effect in February. Because of this, they are raising their rates now. You have probably received a letter from your credit card companies informing you of the rate hike and giving you a choice to “opt out”. The letters state that if you “opt out”, your rate will not be raised, but your account will be closed. Please keep in mind how this will affect your score when deciding whether or not to keep your account open. If you have had the accounts for a long time and they have a substantial credit limit, the effect on your credit score could be dramatic. The best option would be to transfer the balance to another account, or pay it off if possible, and keep it open.

Navigating the credit scoring system is quite a task these days. The best way to keep a high score is to use each card frequently – at least once every 2 months, but pay the balance off in full. And whatever you do, don’t close old accounts!