How will my credit score be affected by closing ONE card account?

Question

I want to cancel my AMex gold charge rewards card next year because it has an annual fee, and it's a totally useless card. everything needs to be paid in full, and its benefits are ok, but nothing other cards dont have, and its rewards points program is a joke, being that I can buy items 100000 times the quality.

Anyways, I tend to keep cards around even if I don't use them, that carry 0 balances, because this is better than closing one, but if I chose to close it, will this affect my score negatively and if so, by how much and how long?

Not sure if this rates more dangerous than inquiries, late payments, or delinquencies.

Also I only have a few cards 3-5, yet I'm noted as having like 15+ accounts open, and realized thats from loans, etc.

Anyways, is this bad? To have this many different revolving accounts? It's shocking because I do technically only have like 4 credit cards.

However I pay EVERYTHING on time, and am educated on credit, so I'm doing the right thing.

ALSO......as a rule of thumb, if everything is paid on time, are scores designed so that TIME itself can improve them? Meaning, if you do something bad, won't just simple time passing by improve on that?

Answer 1

How much closing the Amex would hurt, or if it would hurt, would probably depend on what type of loans you have and the utilization on them.
Major credit cards actually do more to raise scores than loans.

From what you posted, even though most of your accounts are loans, you may not see much of a change at all. If you do happen to see a bit of a drop your scores should start rising within 6 months or so.
Just don't close it if you are planning a major purchase within that 6 month period.


A couple of things you might consider instead of simply closing the account -

If you have another Amex card you might contact Amex and request that they combine the credit limit from the Gold into your other account and close the Gold.
Or
You might find an Amex card that you do like, good rewards with no fees and maybe a lower interest rate, and ask them to convert the Gold into that other card and close the Gold.

Either way you wouldn't be losing the credit limit and it would continue to help your overall utilization.


I recently did a conversion from one Amex to another that had better rewards and a lower interest rate. It took less than a minute for the CSR to convert the card and another couple of minutes for him to go over the new cards terms. Very painless.

Answer 2

Closing a card with a zero balance will slightly drop your score, only because the amount of available credit you have will be reduced. But the drop shouldn't affect your score too much.

If you closed, say, 6 cards at once, then it will greatly affect your score. The amount of available credit will be reduced dramatically, and that could be as dangerous as an inquiry or even a late payment.

You really shouldn't have so many credit card accounts, especially if you aren't going to use them. Would you notice if one of them were lost or stolen? What if your identity was stolen? All those accounts could be used without your knowledge.

Personally, I think you shouldn't have any credit cards. While you do pay off your balances every month, which is a good thing, what if something happened to you that prevented you from paying off your balances, like a job loss or a long stay in a hospital? Suddenly, those balances could become quite high, and having a large amount owed will absolutely affect your credit score.

If I were you, I would cancel all of your unused credit cards, but stagger it over several months so your credit score doesn't get damaged. In the meanwhile, you should pay off your existing balances, and start getting into the habit of using a debit card or, even better, cash. If you only spend the money you actually have, then you never have to worry about paying the bills if something bad should happen. Finally, once the unused cards are closed, close the cards with the paid off balances, again staggered over several months.

Yes, having no credit cards will make your credit score very small. But, if you are only using cash and spending money you actually have, you will also get in the habit of saving money when you know a big expenditure is coming, like an appliance or even a car. Nothing will give you the chance for a better deal, or give you a better feeling, than paying for a large purchase with cash.

Answer 3

When you applied for the card, the hard inquiry dinged your score for a few points. Closing this new account reallly won't negatively impact your score any further. By the way, it is not true that having an unused credit card negatively impacts your score. If you don't use the card, it does nothing to help your score but doesn't hurt it either. Credit card companies will close accounts due to inactivity after a certain period of time. I suggest that you keep this card and use it every few months for a small purchase, maybe a tank of gas. Then wait for the statement and pay the balance in full. This will keep the card active, build your credit history, and avoid interest.

Answer 4

From what you are saying, your score should be pretty high right now anyway, like 700-750+++

Closing AMEX should not hurt your score that much.

You have lots of available credit and don't use it. You are a credit bureau dream.
People with $3000 cards that are maxed out are hurting.

FYI: One late car or mortgage payment could lower your score 100 points or more. The higher it is, the more it can fall.

Answer 5

Your score is only adversely affected if you have defaulted. Closing off unused accounts insofar as the temptation to use them in an "emergency" is removed is an admirable strategy. You must have had a really great score to have got 15 accounts in the first place

Answer 6

I only think it will affect your score if you aren't paying the bill. Since you are closing it on your own free will without a balance you should be fine. You owe no one so you shouldn't be dropped with the credit score.