The content is accurate at the time of publication and is subject to change.

Generally, your credit score is calculated based on five factors, two of which - the length of your credit history and your credit utilization ratio - can be directly affected by closing an unused credit card.

Length of your credit history is basically how long you've been using credit cards, and it makes up 15% of your FICO® Score. You should be mindful to keep your oldest accounts open to have a positive impact on your credit history.

Therefore, if it's your oldest account that has been opened for quite some time and doesn't have an annual fee, it is best not to close it, as having the oldest account active can help you improve the average age of your credit history, and it shows that you've been managing your credit for a long time, which issuers like to see. So, if you really don't want your unused credit card to be closed, it's a good idea to use it for small purchases from time to time.

In most cases, it's better to keep unused credit card accounts open, as closing any credit card account can hurt your credit score, primarily because it reduces the amount of available credit you have. Credit utilization is calculated both overall and per card, so removing a big limit from your total can increase your credit utilization and lower your credit score.

However, if you still want to close the card, you should look at the balances on your other cards and calculate what the credit utilization will be minus this card. If your credit utilization goes up, it makes sense to lower the debt on your existing opened accounts before you close the unused card so that your credit utilization doesn't exceed 30%.

tags : Credit Cards Credit Score

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