What is the impact of closing old credit accounts on your credit score?

Closing old credit accounts can negatively affect your credit score because one of the key factors in determining your credit score is your credit history length. A longer credit history generally demonstrates to lenders that you have experience managing credit responsibly. When you close old accounts, you reduce the overall age of your credit history, which can lower your credit score.

Additionally, closing old accounts can also affect your credit utilization ratio, which is the amount of credit you're using compared to your total available credit. If those old accounts had a high credit limit and you close them, your total available credit decreases, potentially increasing your utilization ratio if you carry balances on other accounts. A higher utilization ratio can further contribute to a lower credit score.

Maintaining old credit accounts, even if they're not actively used, can therefore be beneficial in building a stronger credit profile.