Let Us Cancel Our Credit Cards Without Fear

Lately, I’ve been getting agitated by all the media attention surrounding credit scores and the negative impact of closing a credit card account.

It seems every article out there detailing the latest credit card woes, such as cut credit lines and increased minimum payments, also warns customers about closing their accounts, as if it’s credit score murder.

Sure, if you close one or more of your credit cards, you’ll lose the associated available credit, and muddle your credit utilization, but this isn’t so much of an issue if your other credit cards are paid off.

Secondly, it’s only something you should worry about if you’re in the process of applying for a home loan or some other major loan, or if you plan to in the near future.

Believe it or not, there is such a thing as having too many credit cards, and if we’re constantly told not to close them, consumers out there will end up with so many cards their credit scores will actually get dragged down as a result.

This type of fear mongering only seems to benefit the credit card issuers, who must be delighted that most consumers are now aware of the supposed negative impact of a closed account.

I think it’s gotten to the point where Fair Isaac, the creator of the Fico score, should step in to address the matter.  They should at least tell consumers it’s okay to close their accounts, and that the impact will be relatively minimal if they have other accounts with decent associated history.

Obviously, if you’ve got only two credit cards and one is maxed out and the other is free and clear, it’d be wise to keep the latter one open so it doesn’t look like your entire credit profile is maxed out.

But if you’ve got seven credit cards, five of which are free and clear, it’s okay to close a few.

Also keep in mind that the closure of a credit card will impact your credit score that much less if you have other positive things going on, such as low balances on your other accounts, lengthy, good payment history on those accounts, and a good mix of account types.

Cancel away.

Related Topics:

1. It’s Okay To Cancel Your Credit Card
2. Should I Close My Credit Card Account?
3. How to Cancel a Credit Card
4. Watch Out for Credit Card Inactivity Fees
5. Don’t Close Credit Card Accounts While Building Credit