The credit cards you start with may not be the credit cards you love using forever. You may find a card with a better rewards program or one that gives you more travel perks than your starter card that has minimal perks.

You may be inclined to cancel a credit card that is no longer desirable to use. But here’s why this could turn out to be a huge mistake.

When You Accidentally Damage Your Credit Score

Your credit score is a number that lenders use to decide whether you qualify to borrow money and what rates you qualify for. The higher your credit score, the more likely you are to get approved for a loan and the better interest rate that may come with it.

This is why it is important to keep your credit score in good shape. But unfortunately, canceling a credit card could lower your credit score.

There are several reasons for this. First, your credit utilization ratio is an important factor in calculating your credit score, and it should ideally be kept at 30% or lower. This means that if your total credit limit is $10,000, you would ideally want to limit your outstanding balances to $3,000.

If you cancel a credit card, it could increase your credit utilization rate by lowering the limit you’re working with. For example, owing $3,000 on a $10,000 credit limit is acceptable for your credit score. Closing a credit card with a $4,000 limit and then owing $3,000 out of a total credit limit of $6,000 puts you at 50% utilization, which is definitely not optimal.

The length of your credit history also factors into your credit score calculation. If you cancel a card you’ve had for many years, this could result in a shorter average life of your open accounts. It could also harm your credit score.

Before you cancel a credit card, do this

Canceling a credit card that you no longer use could clearly have negative consequences. So the only reason to cancel a credit card is if it charges you a high annual fee, but you also don’t get much use out of it.

You may also be able to cancel a newer credit card with a small credit limit if it doesn’t have much of an impact on your credit utilization or the average age of your credit history. But if there’s no annual fee attached to this card, it’s not a bad idea to keep it open, just in case.

Rather than canceling an old credit card with a generous spending limit, look at your spending and identify the smallest recurring bill you have, like a streaming service. Then, charge those fees to the credit card you’re inclined to cancel and set it to autopay.

This should keep your account in good standing. And you won’t have to worry about this account being paused and canceled.

It’s never a bad idea to shop around for the best credit card deals. For example, if you travel a lot, you can click here for an overview of the best travel rewards cards and see if any of them meet your needs.

But don’t rush to cancel a credit card because its rewards program isn’t the best or because you replaced it with a better card. Finding a way to keep that account active and in good standing could do a lot of good for your credit score.