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Fact or Fiction Closing Old Credit Cards Can Help Raise Your Credit Score

It can be very confusing to answer the question of whether or not to close older credit card accounts, especially to someone who is just learning about how to repair their credit. On the one hand, these are probably cards that you rarely, if ever, use. On the other hand, they represent a major portion of your credit history. Let's look at both sides of this double-edged sword and determine the best course of action.

First, let's talk about your credit history. In terms of your credit score, length of credit history accounts for a full 15% of your score. This may not seem like much at first, but all you have to do to get the maximum points is open an account as soon as you are ready, and keep it open. That's it, the rest is out of your hands because it just depends on time. So that 15% is actually very easy to get, provided you have opened a credit account as soon as you were responsible enough.

So your credit history is important, but let's talk about usage. Let's say you opened your oldest credit account in college. Maybe you got a great introductory rate on a credit card, used it every day in college for purchases, then you graduated, got a good job, and suddenly you were eligible for much better credit card rewards.

Armed with higher limits, airline bonus miles, cash back and other credit card benefits you soon stopped using your first card. Maybe it's had a $0 balance for 10 years, and you're beginning to feel like keeping the company updated with your new addresses and phone numbers is not worth having the card anymore.

What you should do with this old credit card depends on your situation. If you have another credit card that is almost as old as the first one you may not take a very big hit to your credit score, if you take on at all. However, if your next oldest account is actually years younger then you are increasing your risk of decreasing your score. Closing your oldest revolving credit account will almost certainly affect your credit on some level.

What would a better solution be? Make use of the card. You see, lenders want to give credit to people who will use it, so the usage of credit also factors into your score. It is recommended that you take the oldest card out once a month and buy something with it: a tank of gas, a trip to the grocery store, or maybe just lunch. No matter how you do it, just use the card once, pay it off immediately, and then forget about it for 30 days. This will ensure that your account remains "active" and you can still use your more rewarding cards most of the time.

So, to answer the question we posed in the title of this article: no, it will not help your credit score to close down your oldest accounts. In fact, closing those old accounts could very well hurt your score based on the 15% contribution that length of credit history makes to your total score. With just a little planning and careful use, your old cards can remain useful and contribute to healthier credit.
About Author Ryan J Bell :

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Article Added on Tuesday, April 14, 2009
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