Dear Liz: When we look at our credit reports, it shows we have 20 open accounts with a possible $190,000 of available credit. There are no outstanding balances — every account is paid off each month and has been for the last 27 years. Our FICO scores, depending on the reporting agencies, range from 775 to 802. We would like to close 13 or 14 of these accounts at one time. Can we do this without material damage to our credit scores? If we do, should we print our reports and FICO score beforehand, so that if we need credit for some reason in the near future we could show that to a new creditor?
Answer: You can’t close any accounts without risking damage to your credit scores, and shutting down that many accounts at once could cause your excellent scores to plummet.
Having so much available credit is actually a positive contributor to your scores. The FICO credit scoring formula is extremely sensitive to the gaps between your available credit limits and the amount you’re using — the wider the gap, the better. Shutting down accounts reduces that gap, which is bad for your scores.
That’s why credit experts recommend keeping accounts open if you possibly can, and closing only one or two at a time if absolutely necessary. Avoid closing your oldest or highest-limit accounts, since those are contributing the most to your scores.
If you’re tired of keeping track of so many accounts, consider signing up for an online financial aggregation site such as Mint.com. Monitoring all the accounts in one place can help you make sure you’re not missing a payment, and the sites typically alert you to due dates and fees.
Printing out copies of previous scores will do you absolutely no good with lenders. They don’t care what your past scores were — only what your current scores are. Almost any time you apply for credit, the lender will pull your freshest credit scores to get the most up-to-date estimates on the likelihood you’ll default.