Fair Credit Reporting Act News
Although closing an old credit card seems like a wise decision, it may surprisingly lower your credit score
Sunday, February 9, 2025 - Many people think it's wise financial behavior to close a credit card they never use. This could result in a lower credit score even if in some situations it makes sense. This occurs since credit history duration and credit use affect credit scores among other elements. Closing a past credit card could unintentionally affect these elements, which would lower your score. Should this result from credit report errors, you could have to see a Fair Credit Reporting Act attorney or think about launching a Fair Credit Reporting Act lawsuit to address the problem. The impact shutting an old credit card has on your credit use ratio is one of the main causes that closing an old credit card could lower your credit score. This ratio gauges your credit use about your credit availability. Closing a card lowers your overall available credit, which can affect your use %. Even if you pay all of your payments on time, a greater credit use percentage can lower your credit score. The duration of your credit history is also really significant. Credit ratings take the average age of all your accounts into account, hence older accounts assist create a better credit profile. Closing an old credit card--especially one you have had for many years--may decrease your credit record. Your credit profile may seem less established as a result, which would lower your score.
Closing a credit card can also change your credit mix. Lenders want a range of credit accounts covering mortgages, loans, and credit cards. Should you simply have a few credit types and close one of your oldest cards, your credit profile may seem less varied. Although this element has less influence than credit use or duration of history, it can nevertheless affect your total score. Sometimes people close credit cards believing it will clear negative notes from their credit record, but this is not how things work. For several years, even after terminating an account, its history--both positive and negative--remains on your credit report. Should the account show late payments, those will still be seen by lenders. Conversely, terminating the account could cause you to eventually lose that favorable reporting from your credit file if the payment history was perfect. Should you be considering shutting down a credit card, you should give these possible drawbacks some thought. Leave an old card open and use it sometimes for little purchases to keep its favorable effect on your credit instead of closing it. If an annual fee is a problem, a better choice could be to ask the issuer for a no-cost alternative. Reviewing your credit record is crucial if your credit score declines suddenly following card closing and you believe an error exists. Should erroneous information show up on your report and the credit bureaus fail to fix it, you could have to see a Fair Credit Reporting Act attorney or possibly launch a Fair Credit Reporting Act lawsuit to rebuild your creditworthiness.
