Close Those Accounts or Leave them Open?
Cards that come out these days are getting better and better, so it can be pretty tempting to trade out your old card for a new one. With the tug of rewards, 0% APR offers, and fraud protection, getting a few new cards sounds a lot better than keeping your old ones. However, opening too many credit cards can damage your credit report. And if you open several cards over time and suddenly realize you have too many, what do you do? Should you close all of your accounts?
The myth that persists is that you should close all your accounts in order to successfully boost your credit score. True, while opening several at once or having too many credit card accounts can cause creditors to view your credit unfavorably, suddenly closing all of them can look a little strange as well. There are several things you should consider before calling up all your credit card companies and cutting off all your accounts.
Consider the number of cards you own. If you have a frightening amount of credit cards, perhaps even any number over 5, it may be better for you to close the extra accounts. There really is no reason to own a great number of credit cards in the first place, especially if you are not using the majority of them. Having too many accounts or opening many within a short period of time can drop your credit score. The same can be true for closing several at once too, but you are better getting rid of clutter now than suffering the consequences later on.
It is not necessary to close all the accounts of cards you don’t use; if you are left with a few after getting rid of excess accounts you can still keep them on file even if you don’t use them. As long as you have at least some credit cards open, your credit score should stay in the clear. Closing every single account can harm your credit because eventually you won’t have much in the ways of credit history. Some people have closed all their accounts to remain debt free and pay without credit, but have later found it difficult to apply for large loans with so little credit information. Even having just one credit card can show some creditable credit history. If you have 2 cards in your wallet that you use and a few that you do not use, that is okay. You can always slowly but surely eliminate those accounts over time if you so choose.
As long as you pay all your credit card and any other bills on time and do not carry large debts (in terms of credit cards – mortgages or student loans are typically unavoidably large), creditors and other lenders will not mind if you have a few extra unused credit cards. Senior citizens should especially take this information to heart. If you have all your mortgages and other loans paid off, as well as your credit cards, if all your card accounts are closed, then over time your credit history will fade and be a blank page. That can make it difficult to get something as simple as a cellular phone.
Hold on to the few cards you have in your wallet. A credit history is important in many areas of life, and even if you don’t use some of the cards you currently have, just remember they aren’t harming your credit by being there either.