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Credit Card Applications » Questions » User Questions » Limited/Bad/Fair Credit » I have six credit cards, and have had them for awhile. Lately I noticed that I ...

I have six credit cards, and have had them for awhile. Lately I noticed that I don’t need that many. Is it a good idea to close a credit card, and can it hurt me in anyway?

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Leo Zhu

Got so many credit cards that you can hardly close your wallet? When you have more cards than you need, it might seem smart to “clean house” and close the accounts you no longer use. Before you start cutting up cards, though, think about this:

One part of your credit score depends on the length of your credit history, and another part looks at your debt-to-credit ratio. Both of these can be adversely affected by closing an account.

If you’ve had an account for some amount of time, having it become inactive on your credit report – and eventually removed from the report altogether, which will happen after about ten years – then your overall credit history will be shorter. That can spell a drop in your credit score.

As for your debt-to-credit ratio, also known as your credit utilization rate, the more credit you have available, the better. If you carry a balance of $5,000 on the cards you use, but you have $50,000 of available credit across all your accounts, then you are using less than 30 percent of your available credit – a good thing in the eyes of the credit bureaus. However, if you close the accounts you don’t use and have only $10,000 of available credit left, you are suddenly using 50 percent of your available credit. That will negatively impact your credit score.

If you have credit cards you don’t use, and they don’t have an annual fee or a balance, then by all means take them out of your wallet and tuck them away in a safe place – but don’t close the accounts. Doing so may seem like a good thing to do, but it won’t help your credit score and may very well hurt it.

  • Ian

    What if I close my comparatively new credit card? I have one with quite high limit and creasy fees, it’s not my oldest one and I think it won’t affect my credit score. I didn’t close it because of limit but now I’d like to rip it out of my wallet.

    • CreditLandCom

      As it is not your oldest credit card your credit
      score shouldn’t be damaged. Another thing is debt-to-credit ratio. If after
      closing this card you will be using less than 30 percent of your available
      credit, than go ahead, close it. If not, you’d better leave this idea.

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