Will it reflect negatively on your credit report if you close an inactive credit card?

Answer

No.

Answer

Yes and no.

Closing an inactive credit card can have two negative effects: (1) Closing an older credit card may lower the average age of your credit accounts, and closing your oldest credit card account (since a credit card is often the first credit account people obtain) may lower the total age of your credit history. (2) Closing a credit line may reduce your total available debt which increases your overall utilization; for example, if you have a $1,000 balance on three credit cards, with a total limit of $20,000 ($5,000 on one card, $15,000 on the other), your overall credit utilization is ($1,000 credit used)/($20,000 credit available = 5%, which is an excellent level of utilization (most guides I have consulted recommend a utilization of less than 25% of your total available debt.

If you close the card with the $15,000 limit, your utilization becomes ($1,000 credit used)/($5,000 credit available = 20%, a much higher utilization, and that will negatively impact your FICO score.

However, the effects are usually temporary. As your other revolving accounts age the first effect will lessen, and if your other credit lines increase the second effect will be lessened as well.

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