Improving Your Credit Score: Don’t Close Old Unused Credit Cards

Introduction

Closing old and unused old credit accounts on your credit report can help you avoid unnecessary fees and lower your chance of identity theft but it also can cause your credit score to fall if you do not do it judiciously.

A Prudent Approach to Maintaining (or Establishing) a Good Credit Score

The most prudent way to handle your credit cards and other open accounts are to keep about four to six credit accounts open at all times. This keeps your credit score up and the balances very low which shows that you know how to handle credit and that you are a credit worthy individual. When you show that you have active accounts and yet are responsible with using this credit creditors view you very positively.

A Regular Use Credit Card

The best way to handle having multiple credit cards is to assign one card as the one that you will use on a regular basis. This card will be used each month and then paid in full each month. Another card or two should be used and carry a minimum balance that you pay on each month and this will show that you are able to pay monthly obligations in a timely manner. Other cards, ideally another three to four cards should remain as open accounts but with a zero balance. This will reflect the ability to have credit but not use it and will reflect favorably on your overall credit rating.

What Accounts to Close

In order to improve your credit score, you will not want to close the oldest account on your credit report. This is because this will cause your credit history to appear shorter than it really is and can lower your credit score. Additionally, do not cancel several accounts on your credit report all at once or in a short period of time. If you have a large number of credit cards, in excess of six to eight in total, and want to get it down to about six in total, then you will want to gradually pay down and close the accounts to ensure that you do not harm your credit score and have a very negative impact on your credit. Overall, spacing the closures of accounts over a period of time will reduce the chance of attracting a negative suspicion from potential creditors.