have a $12,000 limit on one credit card and an $8,000 limit on another, charging $4,000 on the $8,000 card can lower your score, even if you owe nothing on the $12,000 card. Generally, says Katz, it’s better for your score to spread your credit card usage among two or more cards, rather than load up on one card.
Length of credit history: 15%. When it comes to credit scoring, older is better. You shouldn’t close down old cards where you have a good record. Moreover, closing old cards reduces your total credit availability, which can raise your debt-to-credit ratio. Say you have $30,000 in credit lines from three cards. You close one card with a $10,000 limit, bringing your total credit down to $20,000. If you have balances adding up to $9,000, you’ll go from a 30% debt-to-credit ratio ($9,000 over $30,000) to a ratio of 45%, which probably will raise red flags.
New credit: 10%. Try to avoid opening many accounts within a few weeks. “Some people fall into a trap during the year-end holiday season,” Katz says. Shoppers are told they can get, say, 15% off on all purchases that day by getting a store card. That opens a new line of credit, and opening several new lines in a short time can lower your credit score.
Types of credit: 10%. Your history will look better if you have a record of making payments on installment debt (such as an auto loan) as well as revolving debt (credit cards). If you want to see your credit scores from all three credit bureaus (Equifax, Experian, and TransUnion) go to www.myfico.com.