An account closure would also cost you the payment history associated with the account when it comes off your credit report. Closed accounts don't usually get deleted immediately, but they won't stay on longer than 10 years. You generally don't want to cancel your oldest card, because its disappearance from your credit report could shorten your credit history and lower your score.
For the above reasons, I don't recommend closing credit card accounts without a good financial reason to do so. That said, I realize that most folks won't keep every card they've ever opened. So, here are a few recommendations for those times when you must dump a card:
- Spread out closures over time so that your utilization doesn't spike.
- Keep your oldest account open to preserve credit history length.
- Keep cards with high limits open.
- Don't close down credit card accounts right before applying for a loan.
Also, scores reflect current monthly balances, so if you can pare down debt (or charge less if you pay in full) on other cards after closing an account, your score can make a speedy recovery.
I always wonder about this: keep my old, unused credit card or cancel them altogether?
What do you think?
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