I’ve had a rough start to my day.  First, I woke up to find that the power outage in the middle of the night had lost todays article I spent all night writing.  Wonderful.  Then, on my way to work, I was rear ended while sitting at a stop sign.  Luckily there seems to be very little damage to my car, however the incident turned ugly when the woman who hit me became furious that I wanted her insurance information.  She claims the scratches she put on my car can be fixed with a black magic marker and didn’t understand why her apology wasn’t good enough for her.  Uh, not how I wanted to start the day.

So for today I am just going to briefly highlight Smart Money’s article on using your credit cards or risk losing them.

While I am completely against carrying credit card debt, credit cards themselves are extremely useful.  Not only can you receive rewards like cash back and frequent flier miles by using them (and paying them off), they can help improve your FICO score.

Due to the credit crisis, many credit card issuers are now going through and closing inactive accounts with little or no warning.  Why is this bad?  A large chunk of your FICO score is determined by how much debt you carry vs. how much credit you are allowed.  By closing an account, the credit card companies are essentially eliminating the latter part of that equation which could cause a major hit to your credit score.

What should you do to prevent this?  While nothing can guarantee you won’t have accounts closed (even loyal customers are seeing their credit limits reduced or closed), by simply using them for little things like gas and groceries on a regular basis (and then paying off the entire balance, of course) you can significantly reduce the chances your accounts will be closed.

Protect your FICO score by regularly using your credit cards responsibly. 

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