Vision Credit Education, Inc.

Your mortgage broker may have said that you need to close one or more credit card accounts before the lender will approve you. Does that mean your credit scores will increase? Don’t count on it!

It is a fact that your credit scores cannot increase from closing credit accounts. In fact, your scores will likely drop.

This is especially true if you have debt balances on other credit card accounts. Your higher resulting credit utilization rate will cause your credit scores to drop.

Why Do Lenders Sometimes Ask for Account Closures?

Lenders may sometimes ask you to close one or more active credit accounts if they are uncomfortable with the amount of available credit that you have. They may simply feel that you would be unable to afford your mortgage payments if you decided to max out your credit cards.

Your lender may indeed ask you to close one or more credit accounts if you fit this example. Understand that your credit score will drop slightly when you do this. That being said, you should wait until the lender makes this request, since it could take up to 30 days before your credit scores adjust for the account closures.

There is simply no advantage to closing open credit accounts unless it is a requirement for mortgage approval. Otherwise, you risk lowering your credit score and reducing your ability to expand your credit history.

Even Fair Isaac acknowledges that closing open credit accounts never helps your credit scores and could likely lower them. Fair Isaac is the developer of credit scoring products that the main credit bureaus subscribe to.

If your primary concern about keeping an account open is that you might be tempted to make charges on the account, then you have a more important concern. In that case, the best option is normally to cut up the card and keep the account open. If you are really unsure of your ability to constrain spending, then closing the account is better than maxing it our or missing payments on future balances!