Loose Change: Preserve your credit score

Star-Telegram

Several banks are closing dormant credit-card accounts, which can hurt your credit score, since the scoring system takes into account whether you’re maxed out on your limits. But there are some easy ways to protect yourself:

It’s generally best to keep your oldest and highest-limit credit accounts open, in part because payments on your accounts and the length of your personal credit history typically account for about one-half of your total score.

A bank’s decision to close the account for nonuse could indeed trigger a slight decline in your rating, but it should rebound within a few months if you continue meeting all of your other payment deadlines.

Several banks are now closing unused accounts to trim their expenses. Banks and other creditors say that it takes a lot of money to send out monthly statements to each of their customers, or even to operate Web sites for those who choose to pay their bills electronically.

Perhaps the best way to keep your credit score intact, and maybe even improve it, is to put minor charges on each of your remaining credit cards every month and then pay the bills when they come due.

To reduce the time and hassle of writing checks to each of those credit-card issuers, consider enrolling in the free auto-pay systems that most banks now offer to their customers. Such plans automatically debit your checking or savings account when a payment is required and can help ensure that your bills are paid on time. — Cowles Syndicate