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Q: I’ve gotten some new credit cards recently. Should I close any of my old credit card accounts that I am no longer using?
A: The answer is: it depends.
This is because the answer for this question can be different for each person.
Depending on your existing FICO score as well as your future plans for additional loans, credit cards, mortgages, etc., you may want to close existing accounts.
Experts suggest never having more then 7 charge card accounts open at once.
On the other hand, by closing an existing account, however you raise a red flag showing your credit debt percentage has been raised.
This is because if you have an open account with a balance of $2000, when that account is closed, the ratio of debt to available debt becomes higher.
This ratio also depends on how much credit you are using that is available to you. If you are using a small amount of available debt, the equation mentioned above may not even matter (or change that much with the loss of a small amount).
For cards that you are paying monthly maintenance fees on or even an annual fee, this may be desired. However, never close accounts that have been open for a considerable amount of time (i.e., several years). These accounts provide credit history to potential creditors and showcase an ability to pay on time.
So you may want to start by closing one account at a time, going slowly, and seeing how it impacts your credit store. If the impact is negligible, and then disappears in a few months, then you might want to close a second account.
However, if you ever see a large dip in your score, it is time to stop the practice.
I suggest start with the most recently opened account or any account that charges an annual fee.