Close Credit Card Account
What To Do?

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What happens to your credit score if you close credit card accounts? Should you close your credit card? Should you keep the account open?

When you close credit card account, whether a major credit card (like VISA or Mastercard) or a store credit card, you can cause your credit score to decrease. I cannot tell you how many people I have talked to that had already decided not to keep their credit cards because they got themselves into credit trouble and then hurt themselves even more by closing an account.

Why just the other day I was on a credit forum and someone had closed an account, then realized what a mistake it was because their credit score dropped about 100 points.Now at first that may seem a bit odd. You close an account the had bad history, why would your credit score go down?

The fact of the matter is, it was credit history. Believe it or not bad credit history can be better than no credit history. The length of time you have established credit is part of what counts for 35 % of your credit score. So when you close the account, you are affecting that 35%.

But, I Really Don’t Want To Use The Card

Just because you have a credit card does not mean that you have to use it. Here are a couple of options for you to consider in lieu of closing the credit card account:

  • Keep the account open and cut up the credit card - Sounds pretty simple. This way you will be less likely to use it because the card won’t be handy. Out of site, out of mind. You keep the length of the time you have had the card, which helps your credit score.
  • Only make one small purchase every month. Say $5 at the grocery store or for gas. This way you can afford to pay it off and you create a good credit payment history. You can even make sure you pay it by having the $5 automatically paid from your checking account on a monthly basis.
  • If you have balance on the card, just stop using it. You can cut it up but DON’T CLOSE the account. Keep the account open and make payments on time, even if it is the minimum payment. The credit bureaus don’t look at whether the balance is paid off, they only put weight on timely payments to the account.

Still Not Sure Why You Wouldn’t Close Credit Card Account?

You already have the card. If you have messed up your credit, it will be difficult to get another credit card. So keep what you have. Again, just because you have it doesn’t mean you have to use it.

Sometimes it can come in handy in case of emergency or when you want to rent a car, reserve a hotel room or pay for something online. You can still pay cash for the rental car or the hotel but its hard to reserve them without one.

By keeping the account open you build the length of your credit history which is an important step in credit repair.

Read more to Fix Your Credit Score

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