Clearing credit card: close it or keep it open?

marktmcewan

HI, I am planning on clearing the balance on my credit card this month. Is it better for my credit score to keep the account open with zero balance or close the account down ?

My thinking is - keeping it open would show as available credit, but unused. 

help would be appreciated.

Thanks, Mark

*I understand using it and clearing it each month will have a positive impact on my credit score but i don't want to go down this route.

PRAISETHESUN

Ignore your credit score - it isn't used by lenders to assess your creditworthiness. What matters is your credit history.

Unless there's a temptation to run up a balance on it again, I'd just keep it open but unused. Older accounts are generally seen a positive by lenders, and having an available but unused credit limit shows you can be trusted with large credit limits. And you never know when it might become useful again to have access to a card without having to apply for a new one.

CliveOfIndia

It's worth bearing in mind, if the card is unused for a reasonable period of time (I think it's generally about 13 months or so) then most lenders will close the account anyway.  So, as far as it goes, keeping it open will have a marginally positive impact on your credit history, until such time as it gets closed anyway.

You're right, using it regularly and always repaying in full every month is a good way to build/maintain a positive history, but it's completely understandable that this approach doesn't suit everyone.

cymruchris

For your credit history - it's better to keep the card - and even if you don't want to put ALL of your spend every month on it - put a transaction or two through, and then pay those off in full. A totally inactive card will certainly be closed - or you may find the credit limit gets reduced through lack of use - but that can have a negative impact on your history, as other lenders won't know the reason for the limit reduction. As for your score - read the sticky thread on here about your credit score and how nobody but you sees it, and how it's unimportant compared to your credit history.