Hello and welcome back to Money Girls Quick and Dirty Tips for Ritchie Life.

I'm your host Laura Adams. The last two shows have been about credit cards, the right

strategy for paying them off and how to use a balanced transfer card to your advantage.

But what happens after you achieve the goal of paying off a card?

In this show I'll discuss whether you should close a credit card account or not.

After you pay off a a credit card account or not.

After you pay off a regular credit card or a balanced transfer card,

the next logical question is what to do with it.

Maybe you have another credit card or two,

so cancelling one seems like a good way to simplify your financial life.

Or perhaps you really struggled to pay off a card that you used too freely in the past.

Now you're determined to close it so you don't get lured into the trap of over

spending again. Those are both very good reasons to cancel a credit card. But before you do it,

you may be surprised to hear me say that there are actually some good reasons not to do it.

Cancelling a credit card can hurt your credit score.

To understand how that's possible, I need to explain a bit about how your credit score is calculated.

There are different credit scoring models that exist, but you've probably heard of the one used by most lenders, the FICO

score.

FICO stands for the Fair Isaac Corporation, and you can find more information about it at myficho.com.

According to myficho.com, the factor that influences your credit scored the most is your payment history.

Whether you've been naughty or nice to your creditors makes up 35% of your score,

so remember to pay all your bills on time.

...