With all the news these days about identity theft, it’s important to examine your credit report for errors at least once or twice per year. If you’ve been using credit for, say, 10 years or more, the odds are high that you’ll see older accounts still listed on your reports, even though you haven’t used those accounts for several years or more. This commonly happens when you purchase items like furniture, stereo equipment, or appliances through a store’s financing plan. You may have long since paid for the goods in question and never used that account to finance anything else, yet the account still shows as active on your credit file. The typical consumer’s reaction is to request via the original creditor or the credit bureaus that such older accounts be deleted. But don’t be so hasty. This could be a potentially serious mistake.
If there is nothing negative about the credit history associated with those inactive accounts, then having them deleted is not only a waste of time, it can also lower your credit score. That’s because deletion of an older account can reduce the average duration of the accounts listed on your credit file, which might make it appear that your credit history is shorter than it actually is. Since a longer credit history is better, you could end up with a lower score after the unnecessary deletion.
Also, by removing the older accounts, you’re also deleting the credit limit associated with them, which in turn may drive up your debt-to-credit ratio. This could also have a negative effect on your credit score. So be cautious in requesting the deletion of inactive accounts that form part of the overall positive history on your credit file.
This was very helpful. I had considered removing inactive accounts.
I do not want to lowere my score.
Good to know. Thanks.
At what point do you have too much available credit, and it would be better
to close a few accounts-(newer ones)? Is there a ratio to income?
“At what point do you have too much available credit, and it would be better
to close a few accounts-(newer ones)? Is there a ratio to income?”
Income data does not appear directly on your credit report,
so there isn’t a ratio of available credit to income. Credit
score is primarily just a reflection of your payment history. The
longer the history, the better. The ratio that matters is debt to
available credit. This is why in general it does not make sense
to close out any accounts with a positive payment history. That
much said, however, it’s possible that you could be denied a
mortgage if the risk analysis showed too much available credit
against income. But that is something that could be easily handled
as part of the mortgage underwriting process. I see no need to close
out positive accounts unless a specific financing situation requires