Does Closing Extra Credit Card Accounts Improve Credit Rating?

If you already have open multiple lines of credit then do not make a decision of closing the extra credit accounts rashly. The best way to determine whether any particular credit account is having an adverse effect on your credit score is to get a recent credit report and an analysis from the credit bureaus. You can get a complete breakdown of your credit report along with an explanation of how each account is affecting your overall credit rating. A service of this nature is available from Experian and also may be available with the other two credit bureaus mainly Equifax and TransUnion. However, the factors that are true for one credit bureau will also probably true for the other two.

There are however a few things that you should know about having multiple lines of credit open to you. Many people today open lines of credit and then shut them when they get a better offer from another service provider. The best example of this can be the credit card service providers. It is not uncommon for people to have several credit cards which they may or may not use.

Having more than one line of credit serves to increase your credit balance ratio which may reflect favorably on your credit report. This holds true specially in the case where the total amount of credit extended to you this not much. Closing down credit account will reduce the amount of credit available to you which will have the result of reducing your credit to balance ratio. This is usually known to affect the credit rating adversely.

However too much of unutilized credit may prove to be disadvantageous when you are shopping for other kind of loans for some important purpose.

If you are intending to apply for more than one credit account then you should bear in mind to maintain some sort of a balance. Apply for the amount of credit that you see yourself utilizing and then a little extra for timeless emergency. Anything beyond that might make the credit view you as a high-risk lender. Do not put yourself in a position where the amount of credit already extended to you that deters the next credit from extending you further loan.

The point is, since you are reading this article, the odds are that you already have multiple lines of credit available to you. Closing these extra credit accounts, in most cases, will only have a minimal effect on your credit rating if at all as long as you have managed your credit responsibly so far.  Think about closing them only after you have viewed your recent credit report along with them an analysis that helps you determine whether or not any particular credit account is having an adverse effect on your credit rating or not. It will also help to determine if you should leave the surplus credit accounts unutilized or you should distribute your usage amongst them equally.