subject: Read This Before Canceling A Credit Card [print this page] Today we caution our savvy readers to think twice before you go and close down a credit card. According to all three credit bureaus, credit scores are influenced by accounts that are seasoned (i.e., greater than two years old). If you choose to close these types of seasoned accounts, it may negatively impact your credit score either directly or indirectly. For example, even if closing a credit card has no direct effect on your score, it can affect your debt utilization ratio significantly. When your debt uitilization ration increases significantly after removing the closed account from your credit bureau report, your credit scores will drop.
If you are not sure how long a card has been reporting to your credit profile, one easy thing to do is access your reports using freeannualcreditreport.com (the only place to go for a free report). Keep in mind that you do not get free credit scores this way. Scores must be paid for one way or another; either purchased directly from the bureaus or by starting a free trial of a credit monitoring service which is available to consumers of financial services.
In the long term, a closed credit card in good standing (with no late payments) and with a $0 balance will usually be deleted from your credit bureau reports after 10 years. Once this account is deleted, you run the risk of losing the history you built with that particular issuer of the card and the length of time you maintained the account in good standing with the credit issuer and this might significantly lower your credit bureau scores.
Two Exceptions
If a closed credit card account is currently reporting a zero credit limit, the card will not be included in the overall calculations even if there is a balance owed on the credit card. Also, if a closed credit card account is reporting a non zero credit limit but in actuality has a zero balance, the card will not be included in the calculations. Examine your credit reports closely and comb throught it with a close eye for these details.
Authorized User Accounts
Often, one spouse will have a credit card and make the other spouse an authorized user. Being an authorized user opens the door to have the history of that account counted into your own credit score. If you are removed as authorized user, then you lose that history.
