If you are looking at credit monitoring services, chances are you are concerned with what your credit looks like at the moment. One of the biggest debates in the credit world is whether it is helpful or harmful to close a credit account you do not use. Before you close a ton of accounts on your credit to rid yourself of unnecessary credit lines, you may want to know what that actually does to your credit scores and your future chances of getting a loan. Read on to see whether or not you should close your unused credit account.
Open accounts help your credit score in a lot of ways because they increase the amount of money available to you at any given time. Thus your debt is a small percentage of the money you actually have access to. Your credit monitoring will show you how much debt you have compared to your available credit at any given time. If you close an open account, you run the risk of making that ratio high. That could have a negative impact on your score.
If you have a great credit score to begin with, closing an account should not do much to it in the long run. However, if you have rough credit or you plan on closing multiple accounts at once, you may send red flags to future lenders by closing your account. Your credit monitoring program would likely show a decline in your credit score over time if you do this.
If you want to close a credit account with the smallest impact possible, try closing down your most recent account. That way you do not limit your credit history in the process. Longstanding accounts are signs of positive payment history, and that history will go a long way in securing a loan in the future. Try to keep your accounts open as long as possible.
Never keep an account open if you know it will just lead you into debt. Having a ton of accounts open will do you no good if they are all maxed out. Lenders want to see someone who has a lot of credit available but does not necessarily use it. You have to manipulate your situation to make that happen. With the aid of a good credit monitoring program, you should be able to keep your scores as positive as possible.
Never let identity theft rule your credit. Protect yourself at all costs.