Some misconceptions about credit cards and credit reports that people believe is that if you close a lesser-used low-credit limit credit card or lines of credit, it may or may not harm or help your overall credit scores. You can never have too much available credit and it will not negatively affect your score. If you close an account, your history will remain on your credit report, even if the account is 20 years old. Depending on how much you owe in relation to your limits on all your accounts you can tell whether or not closing a lesser-used low-limit credit account help or hurt your score. There is no good reason for closing an account from a scoring perspective. According to McFadden, “An account that is open with a good history can stay on forever--it could stay on for 20 years. the bureaus will automatically remove (a closed account) in 10 years, but that could be removed sooner if that credit card issuer decides to remove it. Once it's closed and paid off, that account then becomes inactive, and it's not uncommon for the credit card issuer after a few years or even sooner to just delete that completely, just purge if from their records. One of those five ares that the score considers, looks at how long you've had credit-- that accounts for about 15 percent of the score. That may or may not impact your score a lot depending on your other accounts. If you've only got a few accounts, that could impact it heavily; if you've got a lot of credit for a long period of time, that will probably not impact it by much, if at all (2008)." Having new credit cards within the last six months and canceling a department store credit card you’ve had for years could potentially affect your credit because it will be taking it off your credit score.
Source: http://www.bankrate.com/finance/credit-cards/closing-credit-card-dings-credit-score-2.aspx
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