Is there a credit card in your wallet that you haven’t used in years? Have you wondered about whether you should “just cancel it” and make more room for your other cards?
Will getting rid of the card impact your credit scores? Probably so.
Closing an old credit card account can impact your credit scores in two ways. The first is that it will likely reduce your average credit history.
About fifteen percent of your credit score is based upon your credit history. Closing a card with a long history will certainly reduce the average age of your accounts and will drop your scores.
Closing a card account will also likely impact your credit utilization. Credit utilization makes up about thirty percent of your credit score.
What is credit utilization?
In its simplest terms, it’s the relationship of the outstanding balances on your account to the available balances on those accounts.
Think of it as a fraction: Total of Balances on Your Credit Card Accounts/Total Limits on Those Same Accounts=Credit Card Utilization.
If you close a card with a high limit, it will drop the bottom part of that fraction and result in a drop in your utilization.
Here is a link to recent article from Fox Business News where they talked to our company President and solicited his suggestion about what to do with those old cards: