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What Is The Impact Of Closing My Credit Cards On My Credit Score?

image of female hands holding scissors to cut credit card

Many people wonder what would happen to their credit score if they started closing their credit cards. The answer isn’t that simple, and it depends on a few different factors. Read on to learn how different factors can independently affect changes to your credit score and how you can deal with credit problems.

Understanding Credit Utilization

Credit utilization refers to the total balance on all of your cards relative to the total of all your credit limits.

When you close a credit card account, you lower your total available credit.

If you’re carrying a high balance on other cards, losing this available credit could negatively impact your FICO score because your utilization percentage would increase, and high credit utilization percentages can negatively impact your score.

Length of Credit History

Credit score calculations figure in the length of your credit history. If you close an account, credit bureaus like Equifax, Transunion and Experian remove the account (if it was closed in good standing) from your credit history after 10 years. At this point, it shouldn’t have an effect on your credit.

However, losing that length of credit history could be a consideration in the long run — but this depends on your overall credit score and whether keeping the credit account open is costing you in ways other than your credit score, such as expensive annual fees.

Influential Factors for Credit Scores

Beyond credit utilization and length of credit history, there are more factors that have an impact on credit score. Here are a few things to keep in mind:

Credit Mix– What different types of credit debts or credit cards do you hold?

Diversified types of credit accounts have a more positive effect than just having one type of credit account. It should be noted, however, that acquiring more debt is not a good idea! Opening new accounts to diversify your types of credit is not a strategy for becoming debt-free.

New Credit Accounts– How many credit accounts are you applying for at the same time?

Multiple simultaneous new applications for credit can have an impact on your score as well.

Payment history– Do you pay your credit accounts on time?

Paying late or failing to pay your credit accounts can have a negative impact on your score.

At CreditGUARD, we’ve seen many cases of individuals and families struggling with credit card debt and worries over things like credit scores. While we can’t advise you on directly managing your credit score, we can help you manage your debt situation and create a better, more stable financial future. If you’re behind on your credit card bills, give one of our certified credit counselors a call to learn more about our programs including debt management and non-profit debt consolidation. Our programs don’t involve any new loans, and we make paying your debts simple by rolling your bills into one easy monthly payment. Take the next step toward a brighter financial tomorrow and call us today at 800-500-6489!