Dear Liz: My wife and I have opened about 20 credit cards, including retail cards, over the past 12 years or so. We have no balances on any of these accounts. We recently bought a home and don’t plan to apply for any new loans in the near future. Should we close all these accounts and take the potential credit hit now, in order to have a much cleaner credit sheet after a few years?
Answer: One of the many persistent myths about credit is that having too many cards is bad for your credit scores. In reality, the leading credit scoring formula, the FICO, doesn’t punish you for having “too much” available credit. You can, however, hurt your credit scores by closing accounts.
If you’re not going to be in the market for a new loan any time soon, you can certainly close a few retail cards if you no longer use them and don’t want the hassle of keeping track of those accounts. But you’ll probably want to keep open your major credit card accounts (Visa, MasterCard, Discover, American Express) unless there’s a compelling reason to close them, such as an annual fee you don’t want to pay.