Does Closing Old Credit Accounts Impact Your Credit Score?

Closing old credit accounts might seem harmless, but it can actually affect your credit score. Your credit score depends on factors like your credit history, credit utilization ratio, and the types of credit you have. When you shut down an old credit account, you might shorten your credit history, which could lower your score. Longer credit histories help prove you’re a responsible borrower.

Another point to consider is the credit utilization ratio—the amount of credit used compared to your total available limit. If the closed account had a high credit limit, your ratio could go up, negatively impacting your score. On the other hand, if the account had late payments or issues, closing it might help your score over time.

But don’t worry! Closing accounts can sometimes be beneficial if they’re inactive, have high fees, or carry bad terms. The key is understanding how it affects your financial profile. Before you decide, check your credit score, evaluate the account’s terms, and consider talking to an expert. Managing credit wisely can make a big difference.