To close or not to close, that is the question when it comes to inactive credit card accounts.
The answer relies on your credit needs for the next six months. Close if you don’t plan to apply for credit in the near future. (Just make sure you don’t owe any money on those accounts.)
But keep those inactive accounts open for the time being if you’re planning to apply for a loan or new credit card. Closing accounts can temporarily lower your credit score, which can lead to a higher interest rate.
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Part of your credit score is based on the amount of credit you have available. If you have access to $15,000 in credit and have already used up $5,000, you’ve borrowed roughly 33 percent. Now, if you close a number of credit cards and shrink your available credit to $10,000, your debt ratio jumps to 50 percent. If you must close your accounts, then also pay down your balance to keep that ratio from rising.
Credit scores also factor in how long you have had access to credit, so if you close an inactive account, make it one more recently opened.