Give Me Some Credit

As I continue my efforts toward credit card sainthood, I am looking for ways to keep my future self out of trouble. I have heard that it is not a good idea to cancel credit cards because it increases the debt utilization ratio, which can lead to a lower credit score. After careful consideration, I have decided to take this advice with a grain of salt.

I estimated today that if I were to max out all my credit cards, I could generate about $40,000 to $50,000 in credit card debt. Yikes. Even when I made more money, I would not have had any prayer of repaying that much money. Surely, any potential creditor looking at my credit report would know that and feel trepidation about the possibility of extending me even more credit. So, that isn't good. Also, I have proved that I am not the best when it comes to handling credit cards wisely, so it's better for me to have a slightly lower credit score with a greatly decreased ability to get myself in over my head in debt than to keep the possibility of debt for an extra one or two points.

Based on my internet research, I determined that it is best to keep cards under two circumstances: (1) the card has a high limit and (2) you have had the card for a long period of time. I chose to cancel three cards today. Two of the cards had limits of $200 or less (seriously -- what is even the point of giving someone a credit card with such a miserly spending limit?), and I had not had any of them for more than a year and a half.