Will my credit score go down if I close some of my credit cards?

Answer 1

Yes, your score will most likely go down if you close some of your credit cards. Your FICO score is based on the following things:

* 35%, punctuality of payment in the past
* 30%, the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
* 15%, length of credit history
* 10%, types of credit used (installment, revolving, consumer finance)
* 10%, recent search for credit and/or amount of credit obtained recently

By closing your account, you're making your ratio of debt to to credit limits worse.

For example, if I had three cards with a $1,000 credit limit each, my total credit is $3,000. Let's say I have a balance of $500 on each. That's 50% usage. Now, if I paid off one of them, it would be $1,000/$3,000 or 33% usage. If I closed the card that was paid off, it would still be $1000 charged but it would be out of $2000 limit, so it's back to 50% usage. The work I did to pay off the third card was wasted by me closing the account.

Secondly, closing accounts reduces the average length of your credit.

I'd be very careful about which cards to close with that in mind. Of course, if you have like 15 cards, you might want to close a few, but really weigh your options.

Answer 2

The credit agencies look at debt to equity ratio. A good range is 20 to 30% of available credit. So, if you're debt stays about the same but you're using fewer credit cards it will adversely affect your credit score. (That's why debt consolidation companies do help but can lower a person's score by as much as 100 points).

Answer 3

Do you mean close the accounts? No. It will be better for your credit if you pay off the cards and start using cash for your expenses.