Should You Cancel Any Old Unused Credit Cards?

There comes a point wherein you feel that you have more credit cards than you really need.

Your first impulse would be to close them BUT …

A thought stops you and you wonder:

“How will canceling these unused cards affect my credit score?”

You should be glad that thought crossed your mind. Thank your “financial conscience” for putting you in pause.

Here’s what most credit experts say.

Canceling a credit card can have a detrimental effect on your credit score.

In other words, just keep the account open.

By keeping your old, unused credit card open, this should help your credit.

First of all, it helps increase your available credit, which is good when calculating for your overall utilization ratio.

In case you do not know what utilization ratio means, this is the ratio of your overall credit balances to your total credit limit.

A utilization ratio of less than 30% is what you should strive for in order to achieve an excellent credit score.

Another reason why keeping an old account is helpful to your overall credit score is that that this keeps your payment history on your credit reports.

This is one of the most important factors in a credit score.

Most credit issuers focus on this when evaluating your application for credit so it is best to keep your old, unused credit card open.

Also, by keeping your old, unused account open, it helps increase the average age of your accounts.

The higher the average age of your accounts, the more positive the effect is on your credit score.

Keeping your old credit cards accounts open for as long as possible is actually a very smart strategy in building and maintaining a good credit rating.

So don’t close them. Just keep aging them and use it sparingly just to keep them active.