The Do’s and Don’ts of Closing Old Accounts

We generally make money when you get a product (like a credit card or loan) through our platform, but we don’t let that cloud our editorial opinions. Learn more about how we keep this compensation from affecting our editorial views.

The Do’s and Don’ts of Closing Old Accounts

Closing old and unused credit accounts can help you avoid unnecessary fees and guard against identity theft. However, it can also cause your credit score to drop if you aren't careful. Here are a few do's and don'ts for closing those dormant accounts:

Do...

  • Consider closing unused cards that are costing you money. If your card has an extraordinarily high interest rate or an abundance of fees, and your provider isn't willing to lower your rate or waive some fees, you may want to consider closing the card - especially if you don't use it.
  • Be aware that you can usually cancel accounts that have an active balance by asking your creditor to close the account to new charges while you continue to pay down the balance each month. This may be a good way for heavy credit users to prevent new spending while they are reducing their balances. However, watch out for additional fees.
  • Aim to keep some accounts open. This is generally recommended to keep your credit score and debt balances healthy. Signs of active and responsible credit use are viewed positively by creditors.
  • Remember to check your credit reports for updates and errors after you close accounts. You should generally wait 30 to 60 days for the creditor and credit bureaus to update your records. While the accounts and their payment histories may stay on your report for seven or more years, the status should be updated to reflect that they are closed.


Don't...

  • Close the oldest account on your credit reports. This could cause your credit history to appear shorter, which may harm your credit score.
  • Just throw away old cards and expect your accounts to close automatically. The safest way to close an account is to send a certified letter to the customer service department of the creditor. Typically, you should receive an account closing confirmation letter in 10 days.
  • Be pressured to cancel several accounts all at once. If you want to cancel numerous credit accounts, spacing the closures over time could reduce the chance of attracting negative suspicion from potential creditors.
  • Over-consolidate balances onto one card. A good rule of thumb is to keep your credit balances under 30 percent of your available limits if possible.

If you have any more questions, head over to our Community, where you can ask other Credit Karma members about various financial topics.

Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Email us at corrections@creditkarma.com. For questions about your Credit Karma account, please submit a help request to our support team.

Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

All Comments

Results 251-260 of 676Results per page: 5 | 10 | 25Page 26 of 68   Previous | Next
1 Contribution
0 People Helped

I have a Bank account with $500 overdraft protection. Does this affect my credit? Online it reads like a credit line. Also, I have a debit card with the same bank, and an ATM card. do either of those count against my credit score??

Top Contributor

Reply by
ktjojo74

66 Contributions
132 People Helped
Helpful to 1 out of 1 people

Hi, great question.

First of all you had to have decent credit to get the $500 overdraft. the only time it will actually affect your credit (from experience) is if you repeatedly use it or use it and dont pay it back.  The bank will then report it and it is a bear to get it off your report. 

Part 2. Your debit card and ATM card do not report on your credit either way, 

Hope this helps.

1 Contribution
0 People Helped

One reason given for my credit score was that my revolving bank account had not been open for very long.I was forced to close my bank account due to fraudulent activity on my account but opened the new account at the same time.How can I receive recognition for my long standing relationship with my bank and will it have much effect on my actual score.

Normally accounts that are closed for fraudulent activities are reopened with the same history and credit attributes. Usually, the only thing that changes is the account number. As such, your score should not be affected.

Review by
CK Moderator

1 Contribution
0 People Helped

A few weeks ago my bank notified me of unusual credit card usage, as my credit card number was used in San Diego, CA in the amount of $200, which they took off my statement. 

Then last week someone used my credit card number in New York, NY to purchase Grubhub food over a five-day period in the amount of $730.89.  I notified the bank.  I also notified Grubhub as to the illegal use at the various restaurants, the dates of use and the amounts of each purchase.  They SHOULD be able to backtrack to where they delivered the food and find the person who used the card number and make an arrest (in a perfect world). 

I told my bank that the card should have been cancelled when the theft was made with the illegal San Diego purchase.  Doing that would have prevented the theft in New York. I received notice via e-mail that the bank cancelled my credit card.  That was six days ago and I still have not received a new credit card from them.  Due to the cancellation of my credit card my score went from 840 to 822.

So much for being a reliable person with money!

1 Contribution
0 People Helped

People, people, people, Your looking at their tool, NOT YOURS.

1 Contribution
0 People Helped

So where is the solution to paying off your dept. Account closed paid in full and now credit score went down. It was only closed because there is nothing left to pay on it after paying them for the last 5 years. What can someone do about this?

Reply by
sparky2016

1 Contribution
0 People Helped

Hi Heather, what type of loan was it? If it's like a credit card or reserve line of credit, you should be able to keep the account open even with a $0 balance. If it's like a car loan or personal loan there is nothing you can do about the account closing when it's paid because you entered into an agreement to pay off the loan is a certain period of time and you did so (this is a really good thing btw). Having an account close do to being paid in full is never bad, on the contrary it shows whoever is looking at your credit that you are responsible borrower. I would recommend considering opening a couple of accounts that will stay open and build your credit long term such as credit cards, reserve line of credit, or a mortgage.

1 Contribution
0 People Helped

Which credit cards can I cancel that will not harm my credit. 

In case I cancel limited express macys victoria secrets would that also harm my credit. 

Or just Visa or Master cards that would harm my credit score. 

I was advised by my bank to cancel all these little cards they are all paid off but wil harm me because of past dues. 

Now that they are 0 balances I cancelled them all 2 days ago. Reading all this I hope I my scores will not go any lower. 

1 Contribution
0 People Helped

very good article, any info into how the companies think is helpful.

2 Contributions
0 People Helped

Lumberlifter. Very good info. How do I see who is checking on my credit account?

Reply by
omareduardo

3 Contributions
2 People Helped

You have the right to get a credit report from all three major credit bureaus once a year at annualcreditreport.com, check it out!  I would just get a report from each one of them every 4 months to keep monitoring.  

Reply by
erthnyc

1 Contribution
0 People Helped

I do this every year religiously. Great recommendation!

1 Contribution
0 People Helped

If you close an old account, your total available credit will decrease. That may mean your utilization % will increase and score will go down. On the other hand, if your total available credit is very high, that may make you more of a "risk" and decrease your score. Old accounts are really somethig you should not be worrying about that much, as long as you make sure to monitor them for potential identity theft.

1 Contribution
0 People Helped

this article was very helpful and informative. how can i remove those negative marks on my credit report myself?

You can only remove negative marks that are inaccurate. If you believe that is this the case, then you should contact the bureaus directly:

Equifax, P.O. Box 740256, Atlanta, GA 30374, (800)-685-1111, Web site: www.equifax.com

Experian, PO Box 2002, Allen, TX 75013, (888) 397-3742, Web site: www.experian.com

TransUnion LLC, P.O. Box 2000, Chester, PA 19022, (800) 888-4213, Web site: www.transunion.com

Review by
CK Moderator

Reply by
omareduardo

3 Contributions
2 People Helped

If they are not inaccurate, then you can simply keep going without missing any payments and keeping up with the 'good habits'.  They will stay on your record for about 7 years, at which time the account will go back to good standing unless you make another mistake.  At least that's what I've been read.

Top Contributor

Reply by
Ferdling

17 Contributions
45 People Helped
Helpful to 2 out of 2 people

How about innaccurate and illegal collections that have unknowing been there a while.  Will this cause the account to show improvment?

Reply by
d499968324

1 Contribution
1 Person Helped
Helpful to 1 out of 1 people

Sue in small claims. The debt collector, if there was one, and the company that illegal tried to collect the funds. Show the damages of how they hurt your credit score. It will either win you money or get it removed promptly.

Reply by
jmberrett

1 Contribution
0 People Helped

If you have stuff on your credit that isn't yours it could be a simiple mistake. Example, my husband had a home mortgage (he's never owned a home) and a bunch of college loans on his account. his cousins name is spelled the EXACT same other than middle name. My brothers ssn is 1 number off from mine and i got a bad report from his credit. If it isn't yours dispute it through the credit bureau. If they don't take care of it (which if it isn't yours they should)  then you should sue or whatever you feel is more accurate!

Top Contributor

Reply by
ktjojo74

66 Contributions
132 People Helped
Helpful to 1 out of 1 people

by law, FCRA (the Fair Credit Reporting Act) says that the bureaus cannot knowingly place inaccurate information on your reports.  Conversely, once made aware must remove the inaccurate info immediately. 

You will need to review each report and make a list of the inaccuracies.  Then write a letter to each of the 3 bureaus listing the inaccuracies on that specific report.  Ask them to remove them immediately.

If you are talking about accounts that do not belong to you, you need to file a dispute for each account. 

As for collection accounts,  they can only remain on your report for 7 years. Check the laws in your state to determine how long companies can collect on a contract.  For example in Arizona it is 6 years.  Once that 6 years has expired, the original company can no longer legally collect on an account.  There are several other pieces of info like make sure you dont make payment arrangments with them unless you pay off the account as this will restart the clock. 

I am a paralegal so I know how to research the law and this is what I have found useful to me to clean up the inaccuracies on my credit. 

Top Contributor

Reply by
ktjojo74

66 Contributions
132 People Helped
Helpful to 1 out of 1 people

whoah there with the lawsuit.  A demand letter works very well in this situation.  I had an account with negative history that was on my credit for 9 years. Shame on me for not being more vigilant but shame on the company and the credit bureaus as it is their duty to know and comply with the law. 

I first wrote to the bank and kindly asked them to remove the remark.  They ran me around.  At the same time I wrote a letter to the one credit bureau that this account appeared on.  They sent me back a denial stating FCRA law that countered the denial.  I copied and pasted the laws that Experian quoted in my demand letter. 

I sent a letter to both the bank and Experian demanding $1,000 per month that this account remained on my credit longer than the law allowed. This allowed me to demand that each entity pay me $25k or i would be forced to seek other remedies. 

Well, as you can probably guess, I did not receive any money but my goodness, the next time i pulled my experian report, that one account was gone.  Tah dah. 

now because I am a paralegal, I signed the demand letter as a paralegal. I can do that. It may have carried weight it may have not, I will never know. 

But my attorney advised me I was probably successful because I quoted the exact section of the law that both of the companies broke.  They knew they messed up and they knew that I knew what had to happen next in order to avoid a costly lawsuit.

I have had other positive experiences when using a demand letter as well. 

Results 251-260 of 676Results per page: 5 | 10 | 25Page 26 of 68   Previous | Next

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW

Comment on this Article

Write your comment:
Enter Your Comments