3. Closing Old Credit Cards You No Longer Use
Closing an old credit card feels responsible, especially if you’re trying to simplify your finances. However, data from credit reporting agencies shows that closing accounts can lower scores in two important ways.
First, it reduces the average age of your credit history. Credit scoring models reward long-standing accounts because they show stability. An account opened ten years ago carries far more positive weight than one opened last year. When you close an old card, especially your oldest one, your average account age can drop sharply.
Second, closing a card reduces your total available credit. This often increases your utilization ratio overnight. For example, if you have £10,000 in available credit and carry £2,000 in balances, your utilization is 20%. If you close a £4,000 card, your utilization jumps to 33% without spending a penny more.
Research shows that sudden increases in utilization can cause immediate score drops. This surprises many people who thought closing cards would help them look more responsible.
The exception is cards with high annual fees or poor terms. In those cases, it may make sense to close the account after paying balances down. Otherwise, keeping old cards open — especially fee-free ones — generally helps your credit profile.
Using these cards occasionally for small purchases and paying them off keeps them active and contributing positively to your credit history.
