How Does Closing Your Credit Card Account Affect Your Credit Score?

Did you know that closing your credit card account affects your credit score? Your credit score will go down because you close the account and let me explain why; This is because it will reduce the amount of available credit that you have which can reflect to a certain degree negatively on your ability to obtain credit from a financial institution.

Here is a good example: let's say that you have seven maxed out cards and one paid off card. You decide to close the account that is paid off; this in turn affects your credit score because now all that your credit history shows is that you have used up all of your available credit. This in effect is why this can become a problem.

This shows anyone that is viewing your credit history that you are a credit risk because none of your accounts are open and paid off. This suggests that you are over extended.

If your balance is paid off then you should keep the credit card open because it improves your credit score. When you close an a account you increase the difference between your card balances and your available credit. '

If you have a significant amount of credit card debt then you should keep the paid off accounts open until you can pay off more than half of your debt. If you want to avoid charging those cards then you should cut those credit cards in half and keep them so that you have the account numbers.

In conclusion, especially in today's economic climate, think carefully before making any decision that could affect your ability to borrow in the future.

Source by Benjamin Wise

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