Cancelling old accounts

Haven't posted in a while, but since I'm working all day today I wanted to pop in with something.

My wife was posting on a message board recently when someone asked if they should close their unused credit card accounts. A lot of answers were given, but none of them mirrored the advice I would have given, so I thought I'd post on it.

The short answer is, close the account unless it's your oldest.

Obviously, individual situations vary and it depends on your circumstances, but that's my general advice; I assume if you're considering closing the account in the first place that you probably don't need it. So closing is is a safe move.

Bear in mind this probably won't improve your credit score, especially in the short term. Simply closing an account doesn't necessarily remove it from your credit report. It might help your credit a bit in the long term, but only if your reduce your total overall debt. If you owe the same amount on fewer open accounts, it will more likely reduce your score. (This is all theorizing, of course... a lot of us have opinions about this, but no one but Fair, Isaac really knows the exact math of credit scoring.)

A more important factor in your score, as far as this discussion is concerned, is your "length of credit history," which is 15% of your FICO score (VantageScores and other FAKO scores are useless; don't concern yourself with them and don't work with lenders who rely upon them). That's why I say don't close your oldest account. That longstanding account that contributes to 15% of your score is especially impactful. Unless you've had your second-oldest account open for many years, I say hang on to your oldest account for the sake of your score.