Is it good to close unused credit accounts?

Asked by: Maudie Murphy  |  Last update: January 21, 2025
Score: 4.4/5 (34 votes)

Closing older accounts can lead to a score drop, especially if you decide to close the card you've had the longest. Even though closed accounts remain on your credit report for up to 10 years, they no longer contribute to the ongoing aging of your credit history.

Is it better to cancel unused credit cards or keep them?

If you pay off all your credit card accounts (not just the one you're canceling) to $0 before canceling your card, you can avoid a decrease in your credit score. Typically, leaving your credit card accounts open is the best option, even if you're not using them.

Will closing unused accounts help my credit score?

Yes, closing old accounts can have an impact on your credit score but it depends on your individual financial situation. It's worth noting that the impact of closing old accounts may not be immediate or dramatic. Credit scores are calculated based on many factors.

Is it better to close a credit card or let it go inactive?

It's better to leave it open and let the company close it. If it is one of your oldest credit card it might be beneficial to keep it open since that helps your credit age.

Should you close unused lines of credit?

A good rule of thumb is that you shouldn't close any lines of credit/credit cards unless you're paying fees that you can't negotiate away. Unnecessarily closing will negatively impact your credit score, and realistically it shouldn't cost you anything to keep the cards around.

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34 related questions found

Does closing a credit line hurt your credit?

Closing a credit card can hurt your credit, especially if it's a card you've had for years. An account closure can cause a temporary hit to your credit by increasing your credit utilization, lowering your average age of accounts and possibly limiting your credit mix.

What happens to a line of credit if you don't use it?

After you're approved and you accept the line of credit, it generally appears on your credit reports as a new account. If you never use your available credit, or only use a small percentage of the total amount available, it may lower your credit utilization rate and improve your credit scores.

What happens if I close a credit card I don't use?

Decreased Average Age of Accounts

Your length of credit history, or how long you've been actively using credit, accounts for 15% of your FICO® Score. Closing a credit card account—especially the oldest one—reduces the average age of your accounts, and can negatively affect your score.

Should I close a credit card with zero balance?

Canceling a credit card — even one with zero balance — can end up hurting your credit score in multiple ways. A temporary dip in score can also lessen your chances of getting approved for new credit.

Does an unused line of credit affect credit score?

If you don't use your line of credit and the account sits dormant for a long period of time, your bank may close your account. This could cause your score to decrease because the loss of the account would shrink your available credit (and thus negatively affect your credit utilization).

Is it bad to have a lot of credit cards with zero balance?

Keeping a low credit utilization ratio is good, but having too many credit cards with zero balance may negatively impact your credit score. If your credit cards have zero balance for several years due to inactivity, your credit card issuer might stop sending account updates to credit bureaus.

Why did my credit score go down after closing an account?

It could lower the average age of your accounts

If you paid off a car loan, mortgage or other loan and closed it out, that could reduce your age of accounts in VantageScore's calculations. That's also true if you paid off a credit card account and closed it.

What is a good credit score?

There are some differences around how the various data elements on a credit report factor into the score calculations. Although credit scoring models vary, generally, credit scores from 660 to 724 are considered good; 725 to 759 are considered very good; and 760 and up are considered excellent.

How many credit cards are too many?

Owning more than two or three credit cards can become unmanageable for many people. However, your credit needs and financial situation are unique, so there's no hard and fast rule about how many credit cards are too many. The important thing is to make sure that you use your credit cards responsibly.

Is it bad to leave a credit card without balance?

Closing a credit card with a zero balance may increase your credit utilization ratio and potentially drop your credit score. In certain scenarios, it may make sense to keep open a credit card with no balance. Other times, it may be better to close the credit card for your financial well-being.

Is it bad if a credit card company closes your account due to inactivity?

Having a card account closed by the issuer can hurt your credit scores. Use your cards regularly to avoid it.

How badly does closing an account hurt your credit?

The mere act of closing a bank account doesn't have a direct impact on your credit. The Consumer Financial Protection Bureau confirms that the three major credit bureaus — Experian, Equifax and TransUnion — don't typically include checking account history in their credit reports.

Is it bad to have a credit card and not use it?

Key takeaways

If you don't use your card, your credit card issuer may lower your credit limit or close your account due to inactivity. Closing a credit card account can affect your credit scores by decreasing your available credit and increasing your credit utilization ratio.

How long should you keep a credit card before closing it?

There's no such thing as “too long” to keep a credit card. If you're happy with your card and getting a lot of value out of the rewards, there's no harm in sticking with it. Likewise, if you've stopped using a card and it doesn't charge an annual fee, in most cases it's preferable to keep the account open.

Do unused credit cards hurt your score?

The other risk of leaving a card inactive is the issuer might decide to close the account. If you haven't used a card for a long period, it generally will not hurt your credit score. However, if a lender notices your inactivity and decides to close the account, it can cause your score to slip.

Is it bad to close a credit card with an annual fee?

Experts generally don't recommend you ever cancel a credit card, unless you're paying for it (such as in the form of an annual fee) and not ever using it. And if this is the case, canceling a card once probably won't hurt you as long as you have a healthy credit history otherwise.

How often should I use my credit card to keep it open?

In general, you should use your credit card at least once a quarter (every three months) to keep the card open and active.

Should I close an unused line of credit?

Cardholders with shorter credit histories and smaller lines of credit are more likely to have a large credit score drop from closing a credit card account. Unless you're trying to get out of an annual fee, you're likely better off keeping cards open even if you don't use them.

Which option makes it easier to get out of debt?

Consider Consolidating Your Debt

Debt consolidation can be a good strategy if you have good credit and are feeling overwhelmed by the number of debt payments you have to make each month. Debt consolidation typically works best for paying off credit cards and personal loans.

What happens if you don't pay credit fresh?

What Happens if you Can't Pay your Loan? If you start to miss loan payments, at a certain point you'll default on your loan. In that process, there may be late fees to pay, interest may continue to accrue, there may be other penalties to deal with, and you'll likely end up affecting your credit.