Is it true that closing a credit card account affect my credit score negatively?

Question

I paid everything on time and I don't owe anything. I just want to close this account because I'm not using this card. How bad will this affect on my credit score?

Answer 1

It depends. How long have you had that credit card for? If you ve had it open for a while.. it will most likely negatively affect it. The reason is because the bureaus like to see that you have credit history. And the longer standing you've been with a creditor.. the better you credit profile looks. Also if that card shows no lates or anything and youve had it for a while, then you close it out. You'll lose that long and good credit history. Your report also keeps track of how much your credit limit is (how much combined all the limits on your cardsare..) vs how much you actually owe on them. they would like you to owe under 50% of all your limits.. thats not always possible, so it would help that number for you, to keep that open balance.  Might as well keep it open and shred the card. The longer its open.. the better your credit. as long as youre not late!

Answer 2

Yes, it will have a negative impact on your score.  But just how much of an impact depends on the rest of your credit history.  Your debt-to-available credit ratio makes up 30% of your FICO score (I've been told), and by closing this account you are lowering your available credit number, which in turn will negatively impact that ratio.  

If it were me, if the card does not have a yearly fee, I would just leave it open.  And use it every now and then to keep it "active".  This will help your credit score instead of hurting it.

Answer 3

Yes it will especially if this is the first card you got. Because if this is the first card that you got then closing it will show that you have shorter history than you actually have.

Closing it will also mean that your available credit goes down so that will impact your history as well.

All said and done if you are not going to buy a big asset in the near future it really shouldn't matter that much. Whatever you lose in terms of credit points, you should always be able to make up in a few months.  

Answer 4

Part of the answer depends on how many other cards you have and what the limit is on this card.  Part of your credit score is based upon your debt to credit availability ratio, and closing the card lowers your credit availability (raising the ratio, which is negative).  One thing you could do is just take all your cards and shred them.  This will preclude you from using the account accidently while leaving it open for the credit line.