 TITLE: What to Know Before Closing Your Old Credit Cards CONTENT: How Will Closing a Credit Card Affect Your Credit?\n--------------------------------------------------\nThere are two main ways closing a card can have an impact on your credit score: It can increase your credit utilization ratio, and lower your average account age.\nYour credit utilization ratio, or the amount of credit you're using compared with the amount that's available to you, is one of the most important factors in your scores. Experts say keeping your credit utilization ratio under 30% should be your goal, but the lower, the better. Those with the highest credit scores tend to have utilization ratios in the low single digits. For example, if your credit limit is $1,000, keep your outstanding balance under $300—even better, under $100. Better still, pay off your balance in full before your bill comes due.\nTo determine your current credit utilization ratio, add up all your credit card balances and divide that by your total credit limit. For example, if you have three credit cards with limits of $5,000, $2,000, and $3,000 each, your total credit limit is $10,000. If your current balances across all your credit cards total $3,000, that means your credit utilization ratio is 30%.\nIf you close the credit card with the $3,000 limit, your total credit limit will fall to $7,000. And if your balances stay the same, your credit utilization ratio will shoot up to 43%—potentially dragging your credit scores down.\nBefore closing any account, calculate your total current credit limit, including any new credit lines you've added. If closing an account would bring your utilization ratio close to or above 30%, consider keeping the line open or paying down your card balances.\nRequesting an increase on another one of your credit lines is an option if you do decide to close an account. Be careful, though: Requesting an increased credit limit could potentially appear on your credit report as an inquiry—though this is not always the case. Hard inquiries can result in a slight drop in your score (if it affects your score at all), so it's wise to avoid unnecessary inquiries. This is especially true if you're in the market for a big loan soon, like a mortgage, when every point in your score counts.\nAnother factor that impacts your credit scores is the age of the accounts on your credit report. The older the accounts, the higher your scores. This factor should be less of a worry, however, since accounts closed in good standing remain on your credit report for 10 years after they're closed. Still, closing an account you've had for a long time could eventually have a negative impact since it can lower the average age of your accounts once it does fall off. END