For many of us, credit scores end up being a number that is determined without much knowledge on our part. Unfortunately, this number that we know little about is established because of decisions that we make. And when it comes to those good ‘ol credit cards, your credit can definitely be affected.

The two biggest parts of your credit score are built based on credit availability (versus debt) and payment history. While the history of your on time payments can lower or raise your score, the amount of debt that you have in relation to the amount of credit you’ve earned can have a larger influence. All of this links to your credit-utilization ratio. The ratio, calculated by dividing your available credit into your debt, reveals much of your credit score. The higher your ratio is, the lower your credit score.

Imagine that you had four credit cards with a total credit line of $20,000. Your debt on these two cards is $10,000 for a credit-utilization ratio of 50%. If you decided to cancel one of these cards, that had a $5,000 credit limit and $0 debt, then you’ve just changed your credit-utilization ratio to 75%.

The biggest benefit to closing a credit card account is to reduce your chances of charging more debt. So, although it may lower your credit score for the time being, it may help you pay down your balances faster. Keep in mind that it’s also recommended to cancel your newer cards first. Older cards have more payment history and canceling one of those would have a bigger impact on your overall credit score.

While offering debt counseling many people ask ‘Should I close my credit account?’ There are several reasons why an individual should close their credit accounts. Possibly the most popular is to access another loan. However most individuals who seek additional credit go about it the wrong way and end up closing the wrong accounts. One individual said ‘I close my credit account and my credit score went lower’, this is a stark reality if you end up closing the wrong credit account. First let’s examine the reasons you should close some credit accounts:

• Eliminate Some Debt
• Apply for new credit facilities
• Improve your credit score.

However here is a step by step guide on ‘how to close my credit account’

Step 1: Check Your Credit Score: Click below and get your credit score

Browse through your credit report to ensure there are no errors; it is a known fact that all three USA credit repositories constantly make errors. If there are errors write to the reporting bank immediately and follow up with them that they inform the credit repository to make a change. Even a late payment affects your credit score.

Step 2: Before you close any credit account card begin paying your bills on time: You can improve your credit score by paying every credit account card on time. Ensure that for at least 12 months you pay ALL bills on time.

Step 3: Try to reduce your credit account card balances: This is imperative as keeping your debt balance low and reasonable on most of your credit account cards and on other forms of revolving credit facilities will improve your score. This means that when you are paying off your credit card balance do not use more than 30% of the existing credit as this will dramatically affect your debt to credit limit in your credit score. At the time when you request your credit score large outstanding debt to credit limit can reduce it.

Step 4: Don’t close unused credit card accounts: If you have unused cards you should not close them at all. This serves to raise your credit account balance to limit ratio. This acts as a negative on your credit score. This means that you should aim for at least a 0.5:2 ratio when checking your credit accounts. New credit is said to in some way affect your ratios negatively. However we have not seen this happen if you don’t us the card at all.

Step 5: Apply for a credit account card if you have ONLY one or NONE: If you have only one credit card or in fact none we highly recommend that you apply for a credit account card. This can severely limit your credit score growth. So get at least 10 options on credit account cards with this service:

Once you have gotten the credit account card, manage your credit responsibility by not spending more than you can afford to pay off before your minimum payment is due. Get a checking account and attach it to your credit card account and pay on time. This will build up your credit history and score. It is a known fact that people with no credit cards tend to have a much lower score than an individual with a stellar credit history.