How much will closing two credit accounts affect my FICO score?

Question

I recently made the mistake of closing two inactive credit accounts. Now I hear this can have a negative effect. I am concerned because one of the accounts was a Sears card that was opened 11 years ago. I just recently got above 740 and I dont' want to jepordize my score.

Am I worrying over nothing? I still have plenty of unused credit, so it shouldn't affect my utilization too much.

I should note, that I only closed two accounts, and based on my AVAILABLE credit, it should only effect my utilization by a few percentage points. I have about 60,000 in available credit (not including HELOC) but I'm only using about $4000. I closed two accounts, totaling about 6,000 of available credit.

Answer 1

Your score is caluculated by a number of things, the legnth of your credit history is only one of them. So it may knock a few points off your score. However, paying your bills on time, keeping a good debt to credit ratio (which it sounds like you have) and having a balanced credit portfolio (rotating credit and loans) will all have a good effect on your score.

Chalk it up to experience.

Answer 2

well closing any account, inactive or not is not a good thing especially if you have an excellent credit rating like you do..and a long history of good credit....you could always get a credit report since you closed those accounts and see how you rate now....but next time just cut up the cards or put them away and leave the account alone and if you want to use the account again just request new cards..just paying your bills and on time boasts better on your rating
i wouldn't worry too much...especially since you still have good active accounts

Answer 3

It will probably have a negative affect because depending on how many trades (credit cards, mortgages, loans, etc.) it will affect your debt percentage. Wow this is gonna be a long answer. The reason why they say it will negatively affect your credit is for example: you have 2 credit cards, $1000.00 limit each = $2000.00. you have a balance on one of them of $500.00. So your debt percentage is 25%. If you close the card with no balance you then have one credit card with a limit of $1000.00 and a balance of $500.00 making your debt percentage 50%. It increases it which does have a negative impact. Does that make sense? Now of course there is WAY more to all this but that is pretty much the basis and lenders do see your debt percentage and take it into consideration.. Hope this helped.

Answer 4

Not a mistake, but a smart move. I myself only have two cards that are paid off in full when they are used. As for the Sears card, I only activated mine when I make a major purchase. This is how I get out of paying the yearly fee.

Answer 5

Dropping or closing accounts can drop the fico by a few points, it's best to keep them open, even if you never use them, the point loss should clear up quickly though

Answer 6

dont sweat it. but closing those card will shave of a point or two. just keep it above 680-720 and you will be fine!