Thinking of closing old credit cards to be more “responsible”? It might seem like a smart move, but it can actually hurt your credit score.
Here’s why: Your score factors in both your credit utilization (how much of your available credit you’re using) and your average account age (how long you’ve had credit).
For example, if you have 5 cards with a $10,000 total limit and $500 in balances, your utilization is just 5%. But if you close 4 cards and your limit drops to $2,000, your utilization jumps to 25% with the same debt!
Plus, closing older cards shortens your credit history.
Tip: If your old cards don’t have annual fees, consider keeping them open to maintain a strong credit profile.
