Does Cancelling My Credit Cards Increase My Credit Score?

There were 173 million credit-card holders in America in 2006, according to the U.S. Census Bureau, projected to grow to 181 million Americans by the end of 2010.

It Negatively Affects Your Credit Score

Never close a credit card for the sole purpose of raising a credit score, advises myFICO. The Fair Isaac Corporation calculates FICO scores by examining individuals' total used credit in relation to their total available credit. Closing a credit card account decreases your available credit, which can negatively affect your score.

It Can Be a Good Thing

From a credit management perspective, closing old or unused credit card accounts can prevent using them and falling further into debt. Closing one or two of several accounts doesn't hurt. Creditors may decide consumers with more than the national average of 3.5 credit cards are overextended, according to CreditCards.com.

Bottom Line

It's always a good idea to keep as many accounts with low balances open as possible, which gives your credit score a nudge upward. However, if you have many credit cards listed on your credit report, closing a few accounts probably won't hurt your score.

References

• MyFICO: Will Closing a Credit Card Account Help My FICO Score?
• Bankrate: Close Down a Zero-Balance Card?
• Consumer Credit Counseling Service of Southern Oregon: Statistically Speaking...
• CreditCards: Industry Statistics