What If You Always Pay Cash?
Keeping a credit card account open and active; even if you use it only occasionally can help your credit score, even if you prefer to use cash.
A simple way to reduce debt is to stop using credit cards, but that could negatively impact your credit score. To stay “all cash” and maintain solid credit:
- Don’t close credit card accounts. Closing the account reduces the credit available to you and impacts one of your important credit-scoring ratios. Even if you don’t plan to use the card, keep the account.
- Occasionally use the account. Make a small purchase every other month and pay the bill on time. That will keep the account active. If you want, put a recurring purchase (like a cell phone bill) on your card so the charge will be automatic.
- Pay your bills on time. Whenever you have a balance, pay the bill on time. On time payments is a major contributor to a good credit score.