Is it best to close open credit cards or leave them open? I was wondering this because I want to keep my score high. I have heard that if you close them, it could hurt your score.
Updated on March 27, 2019
First of all, it is important to remember about your debt-to-credit ratio or credit utilization ratio that is the amount of debt you currently have vs. the amount of credit available, as it determines a third part of your FICO score. When you close a credit card account, the total amount of credit that you have available decreases and affects your credit score in a bad way. It’s usually recommended to keep your debt-to-credit ratio under 30%.
Then, if your account was in good standing, positive information that is added to your credit reports every month may also suffer. However, in case you still have some valid credit cards with no balance carried, they will continue to bring good records to your credit report.
What is more, canceling an old credit card account can also make it seem like you have a shorter credit history which may also lower your credit score. But if you are going to cancel one of your new cards, this move will more likely not affect your credit history length.
In addition, unused credit cards with no balance and with zero annual fee may improve your credit score. That’s why we would recommend avoiding canceling your existing credit card, especially if you own it for a long time and make payments on time. But keep in mind that in this case you will still have to use that credit card from time to time so that it is not closed.
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