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Keeping credit cards can actually help heal your credit score

Credit card debt has reached a high point in America, according to an annual study by Experian, and many people are having to face the hard task of paying off their balances. If you have already reached your goal of paying off credit card debt, your instinct might be to get rid of the cards and avoid temptation. But, rebuilding your credit may actually be easier if you keep the same credit card. 

Using history to rebuild your credit score 

Most lenders rely on FICO scores to determine how trustworthy a particular borrower is. For many, paying off credit card debt is motivated by improving this score so that they can get approved for a new house, car, or other expense. But, although it may seem like a good idea to get rid of the credit cards that put you in debt in the first place it's important to remember: the length of your credit history is 15% of your overall credit score. By cutting up your old cards and starting over, you lose the benefit of having a long history to work with. 

Having a credit card also contributes to your "credit mix," which is 10% of your credit score. FICO considers your combination of mortgages and other loans, along with credit cards, when calculating your score. This is especially helpful for younger people who have not acquired a mortgage, leaving their portfolio with little information. 

Taking advantage of rewards

Keeping your credit card also means you can take advantage of rewards programs. If you stick to mindful purchases and pay the balance every month, you can quickly accumulate cash rewards, travel miles and other perks that can help with household expenses. This can be an easy way to make credit cards work for you, all while rebuilding your credit score. 

Paying off credit card debt is no easy task. To reach the end, or near the end, of that journey is an accomplishment in itself. With careful planning, you can use those newly paid off credit cards to build towards a new financial future. 

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