Protect Credit Score When Closing Credit Card Accounts

If you're thinking of closing a credit card account, consider this: Closing a credit card account could hurt your credit score but, if you’re careful, you can close the cards you don’t use with little effect on your score.

The total of your card balances divided by the total credit limit on all of your cards — your credit utilization ratio — may be the most influential factor in your credit score. The best credit utilization is 0%; a good utilization ratio is less than 30%.

If you close cards you haven’t used in awhile without paying down the others, your total balance due becomes a higher percentage of your new, smaller, overall limit. Your credit utilization ratio goes up.

Paying your credit card balances in full each month isn't enough to improve your score. What counts is the amount you've charged that month, because you never know on which day the score is calculated.

Your best strategy: Pay down your balances before closing any card accounts to minimize the impact on your credit score.

These five factors carry the most weight in affecting your credit score:

  • Your overall revolving debt. This is the amount of credit card debt you owe in relation to your available balances, both on an individual account basis and overall. It's better to owe a smaller amount on several cards than to max one card to its limit. A good long-term approach is to keep your balances between 10% and 35% of your available credit, and definitely at 10% in the three-to-six month period before you apply for any sizable loan.

  • Your payment history. Paying before the due date can mean the difference between an average and an exceptional credit score.

  • The length of your credit history. Raise your score by keeping accounts open for more than seven years. Instead of closing accounts, work toward paying them off and then let the accounts remain open. Use them for small purchases that you pay off each month.

  • The number of inquiries and new debt in your records. Fortunately, all mortgage inquiries within 30 days are grouped as one inquiry. Auto inquiries similarly have a 14-day limit.

  • The kind of debt you incur. Your credit score is affected by two kinds of debt: installment debt (auto loans, for example) and revolving debt (credit cards). Credit bureaus look more favorably on installment debt than revolving debt.

If you're thinking of closing an older credit card because it carries a high rate, check out the Harvard University Credit Union Platinum MasterCard. We're offering an incredibly low 3.99% APR on all balance transfers for the first year that you have the card. For more information, stop by any of our branch locations, email us or call us at (617) 495-4460.


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