Does Closing a Paid Off Credit Card Negatively Impact Your Credit Rating?

Does closing a paid off credit card negatively impact your credit rating?


Does Closing a Paid Off Credit Card Negatively Impact Your Credit Rating? - Does closing a paid off credit card negatively impact your credit rating? It's a very good question. The answer to it is it can, but it doesn't necessarily mean that it always will. Here's the issue: When you have a credit card on your credit report that is open unused your credit limit on that card actually benefits your credit score.

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By closing the card the unused credit limit is no longer factored in to your FICO credit score, and by doing so you can actually lower your score very, very quickly.

So if the credit card issuer is not charging you an annual fee and you don't mind keeping the account open or in other words, you're not scared of it being stolen and used fraudulently, then I would advise to go ahead and advise to keep the account open. If you don't want to use the card or you're afraid of it being stolen then simply run it through the shredder, and don't ask for a new card in its place.

That way you benefit from the card being opened, but there are no issues with respect to it being stolen and used fraudulently.