Credit Score Lessons

Q: I have nine credit cards and have paid off four, but I read somewhere that you should not close the accounts because if you do, that could actually lower your credit score. I don’t understand how paying them off and closing them could negatively affect my credit score. It seems I am being penalized for doing so. Hope you can help.
—T. Jackson, Indianapolis

A: Yes, it’s true that closing your credit card accounts could and probably will lower your credit score because it shortens the length of time that you’ve held credit. Essentially, the longer you have a card (in good standing, of course), the higher your score.

But there are other factors such as having a high debt-to-income ratio, which can come from having too many credit cards with high balances. If, for example, your nine credit cards total $50,000 in available credit, yet your income is $40,000, it’s a red flag to creditors that you are carrying too much credit, which equates to the amount of debt that you could incur. I recommend lowering the balances, but keeping the cards.

For more information, order Everything You Wanted to Know About Credit But Were Too Ashamed to Ask Workbook: A Crash Course in Consumer Credit by Anthony Miles (Rising Star Foundation; $29.95) at