If you have ever been having problems with credit cards, you'll notice that there are usually more than one card involved. The average scenario is always getting more and more cards until you can no longer repay what you owe. Sounds familiar?

Disciplined people who have managed to pay off a card debt will want to cut their card and never to use them again. What better ways are there to ensure that new debts are not created while you settle old ones? Besides, this is a good thing as it mark a milestone of your debt elimination effort and it is satisfying to say the least.

Apart from just destroying the card, some people go all out to cancel the card once and for all. Now, this is where most people don't realize that they could be doing more harm than good. Much more. Why? How does it make any difference when you are not going to use that card anyway?

It is safe to say that as you work towards paying off your debts, you are also working towards improving your credit score. Canceling a credit card, even after you have cleared it, reflect badly in your credit record. To understand this, you need to know how credit rating works.

A big part of credit rating are determined by the amount of credit facility at your disposal and the your debt. If you have 3 cards with $3000 limit each, you have a credit facility of $9000. Let's say you already used up $7000 of this facility. That's 80 (outstanding $4000 out of facility of $9000). Do celebrate and cut your card if you wish. Cutting your card can also stop you from using it to create more debt again.

But at this point, if you cancel your card, your credit used percentage will jump back up to nearly 70% (outstanding $4000 out of facility of $6000). See the difference? When you cancel your credit card, you lose credit facility which in turn effect your credit rating.

Dealing with debts and money can suck away your energy and leave you drained, especially when you are not familiar with the way money works.

However, this situation can be reversed if you finally understand the concept and begin putting it to work. At this point, coming to terms with your financial situation and debts give you the power to mend the situation. Using the information in this article for instance, you can repair your credit score without having to pay more than you already did.