This is something that few people know and something I found out the hard way: opening and closing a credit card can lower your credit score. This is how I found out:

I had a credit score of just over 700 which is pretty good and it will get me most loans. The highest credit score possible is 850 so I have a ways to go. Anyway, my wife and I went to buy a mattress at Macy’s and they were offering a special deal where we could get $150 off for opening up a Macy’s card with them. I wouldn’t have thought about doing it for just $50 but $150 was a sizable amount off the mattress and so I did it.

Everything was fine and we had our mattress, got the discount, and we got the card in the mail which I was not going to use.

Two months later though, our car insurance was expiring and we got the renewal notice in the mail. To my shock our car insurance went up about $150 (coincidence) and we had had no tickets or accidents that last year. It was possible inflation was responsible for a price hike but a $150 was way more than inflation.

I called my insurance company and asked why my rates had gone up and after researching the lady told me that it was because my credit score went from OVER 700 to just UNDER 700. That 700 number was the break where people below it get charged more than the people above it.

I inquired how that could happen as I didn’t ever even use my credit cards and just have them for emergency situations. My credit should not have gone up because I had not used it at all that year. She then asked me whether I had gotten any new cards that year or closed any cards because that could affect my score.

New cards? No…….wait a minute…..there was a Macy’s card I opened for the $150 discount. Could that have been it?

Yep, she said, that could have been it. You see, your credit score is a rolling number and the older your credit cards are the better. Whenever you add on a new card you are taking on a brand new line of credit that can lower your credit score.

Likewise, when you CLOSE an account, the older the card you close the more it can lower your score because you are getting rid of a trusted old line of credit which makes your total score less trustworthy. It’s hard to explain and there are many factors that go into a credit score but opening a new card and closing and old one can adversely affect your credit score.

Credit and debt are not good things as we all know. It is best to only use credit cards for convenience (pay off the bill every month) or for emergencies. Your credit score is something that can be affected by the things you do with your credit cards and this is just one example. So be careful how you use your cards and try not to get into debt with them because it will be a lot harder to get out of debt than it was to get in it.

Not everybody is in debt though and that is because many people don’t buy things unless they have the money to pay for it. It used to be that cash was king and people payed for things by reaching in their pocket for the money or they wrote a check. This meant they were never spending money they didn’t already have.

It is so easy nowadays to pay for everything with the credit card. Almost all shops and restaurants take it and just carrying a credit card is easier than dealing with cash. However, paying thing with a card has obviously not been working for many people as they continue to charge things that they can’t afford and don’t have the money for.

Of course big ticket items like houses, cars, and boats will be financed by credit more times than not but that is not what we are talking about here. People who are deep in debt and looking for debt relief grants have most often gotten there one small purchase at a time. They start off debt free but through the years they just keep on charging that card and end up with so much high interest credit card debt that they are then forced to contemplate bankruptcy.

One of the ways you can prevent this from happening is to change your spending habits. If you make it a rule to not buy anything unless you have the cash, you will be forcing yourself to cut back and show some self restraint. That means cash for all items including that $1,000 flat screen television you want and the Wii game console to go along with it. Make a new rule in 2010 that in order to buy something, you must first save up the money to buy it. Then when you have enough, you can pay cash for it or write a check.

If you make this new pledge to wait to buy things until you have the cash, you will get a good feeling inside that you have earned the item. This will allow you to enjoy it even more and it will also put the breaks on your out of control spending. You still might need debt relief but at least you will be making a good start to fixing the problem.

Too many people act irresponsibly with credit cards and the result is that they are then saddled with enormous debt that it is almost impossible to digg out from under. No wonder many people go online every day looking for debt relief grants and hoping for a miracle.

The only way to stop debt is to never get in trouble with it in the first place. I was taught that you shouldn’t buy something unless you have the money for it. I had to wait if I couldn’t afford something but now that way of thinking is obsolete. People feel they are entitled to whatever they want or think they need just because they have those plastic credit cards in their pockets.

Americans have become increasingly erresponsible in the last 20 years or so. When I graduated college, I applied for credit cards and couldn’t get one. Now the credit industry is so much different that all college students can get one if they want. In fact they can probably get a handful of credit cards if they want them and all they have to do is fill out the information on the “pre approved” forms and they qualify with no problems.

Debt relief has become a huge industry in this country. Not only are people searching for debt relief grants and loans, they are also hoping to find ways to lower their interest rates and even ways to declare bankruptcy so they don’t have to pay it. Credit card interest rates are so high that it is improbable that many of these debt ridden people will ever be able to pay of their debt.

Jobs are being lost everywhere and this has impacted the mortgage industry and credit card industry as well. It is clear that the best way to combat debt is to never get in trouble with it in the first place. This would mean that young Americans would have to change their ways and never borrow beyond their means like their parents have. Will this ever happen?