If you're trying to improve your credit score, it seems logical that cancelling some of your credit cards would help, doesn't it? After all, having less high-interest credit available to you seems like it would be a good thing.

Well, not so fast. The fact is, cancelling your credit cards with no outstanding balance can actually damage your credit score rather than help it.

Part of the calculation of your FICO score is based on the amount of outstanding debt you have compared to the total amount that's available to you. In other words, if you have two cards that are maxed out and two cards that have no balance, this ratio is lower than if you only have two cards that are maxed out.

When you're working to get out of debt, it can be motivating to close the credit card accounts as you get them paid off. But it will hurt your credit score if you still have balances on the other cards.

The better way to handle this is to cut up the cards that are paid off, if you don't want to use them any longer, but leave the accounts open with the credit card companies. These accounts will show up on your credit report even if you aren't using them regularly, and they will help to lower the credit to debt ratio, and in turn raise your credit score.

The only time it makes sense to close credit card accounts is when you don't have an outstanding balance on any of your cards. In this case, there is no debt being carried so the ratio is going to be zero no matter how much or how little total credit is available to you.

So once you get your cards paid off, go right ahead and cancel any accounts you don't want any longer. But until that time, make sure you leave them open - just don't be tempted to spend more money on them and get further back into debt!