I’ve been getting a lot of questions from people that amount to “What is up with unused credit cards?” It’s true that closing a credit card may have the counterintuitive effect of lowering your credit score. 

An unused credit card is one that has a zero balance, that you never use, or even have any plans to use. One of the Big 3 credit reporting agencies, Experian, provided this example of how closing a line of credit affects the category of “credit utilization”: 

If you have a credit card with a $2,000 credit line and another with a $3,000 credit line, your total available credit is $5,000. If you currently have $1,000 in debt between the two cards, your credit utilization rate is 20%.

When you close the card with a $2,000 credit line, your available credit decreases to $3,000. With $1,000 in credit card debt, your utilization rate jumps to about 33%.

Another category that may be affected is “length of credit history.” Closing a credit card you’ve had for a long time will truncate your history when it is removed from your credit report. Doing the opposite and closing an account you opened in the last six months will have a minimal impact on your score.

I saw some experts recommending putting all streaming services on an unused card with a long history — otherwise the issuer may cancel it at any time and potentially leave you in a bind. There are no standards for closing an unused account, but I read some anecdotes that suggested it could happen in as little as six months. 

The good news is that your positive payment history with any card you close will stay on your credit report for 10 years. I wish credit scores weren’t as confusing as they are. Luckily our team has put in the time to find out about them — contact us to learn more.