Benefits

• Paying down or paying off credit cards will have a better effect on your credit than paying off any other debt. Your credit score measures your utilization rate -- how much unused credit you have available -- and that rate gets worse the closer you get to your card limit. Your utilization rate and your total debt add up to 30 percent of your credit score; only your payment history has a bigger impact on your score.
  
  

Utilization

• It may not be a good idea close your credit accounts once you pay them off. Closing accounts means less available credit, which reduces your utilization rate -- which lowers your score. Credit history counts for 15 percent of your score; if you close a 10 year old account and keep a five year old account, credit bureaus may react as if your history were five years shorter than it really is. If you have several accounts and a lot of history, however, that will affect your score less than if those two accounts were the only debt history you have.
  
  

Risks

• The financial crunch of the early 21st century makes credit-card companies nervous: Even if you've never missed a payment, your card company still worries you might default. For that reason alone, the company might cut the limit on your card -- reducing your utilization rate -- or jack up the interest rate steeply. The easiest way to avoid this is to pay off your balance every month: A lower credit limit on a card that carries no balance won't hurt your score too much.
  
  

Timing

• Credit bureaus check your card use at the end of each billing cycle. If you pay off your card each month, then max it out again, bureaus will assume that you're constantly at your credit limit and lower your score. To avoid this, pay off your card online a week or so before the bills go out: That way you'll have nothing on the card when the bureaus check your account.