I'm Canceling My Oldest Credit Card. Here's Why I'm Not Worried About My Credit Score

Ideally, it's best to avoid closing credit card accounts if you can. After all, length of credit history has an impact on your credit score. For your FICO® Score, your credit history represents 15% of that three-digit number. I've spent the last year or so getting my finances in order, paying off debt, and opening new credit accounts that work better with my spending. I was originally not intending to close my oldest credit card account, but I changed my mind about that based on a few factors.

The card I'm canceling has a low limit, especially compared to some of my newer cards, and also charges an annual fee. Last year, I paid that fee, despite knowing that I wasn't going to use the card (its benefits also pale in comparison to other cards I use for everyday purchases), purely so I could keep the account open. Now that I've paid off debt and boosted my credit score, however, the gloves are off and that card's days are numbered. Here are a few reasons why I'm not worried about the impact this will have on my credit score.

I have another old account with a higher limit

While it's true that the account I'm closing is my oldest credit card, I have another active account that's nearly as old. And the credit limit on it has been increased multiple times by the card's issuer. I admit that I don't use this credit card as one of my everyday payment methods, because the benefits on it fall short of what I get from other, newer cards. But it's worth keeping open, both for the age of the account and the high limit. Plus, unlike the card I'm canceling, it has no annual fee.

I have a high credit limit overall

Several years ago, I might have been a bit more worried about canceling this old credit card because I didn't want to lose even $1 of my credit limit. At that time, my credit score and income were both lower than they are now, and since credit utilization ratio figures into credit scores, it was in my best interest to keep every bit of available credit limit to keep my ratio as low as possible.

Now I've paid off all my revolving balances, and I've also opened two new credit cards since fall 2022. One is a grocery rewards card that pays me generous cash back for my food spending (a significant part of my budget, as I love to cook). The other is a travel rewards card that I applied for after I was denied a credit limit increase on one I already had.

Both the grocery card and the travel card came with initial credit limits 10 times (or more) higher than the one on my old credit card, so losing a card with such a low limit is now a lot less significant than it was before. Plus, these cards actually offer me a lot of benefits, like the chance to earn cash back and points I can redeem for future travel.

My credit score is very high

The final reason I'm not concerned about the potential credit score impact of closing that credit card is that my credit score is already over 800, putting it into the "exceptional" category for FICO®. While part of me would be absolutely thrilled to see it touch 850 (a perfect score), I know that a score over 800 is already enough to qualify me for the best interest rates. Plus, according to research from The Ascent, only 20% of Americans have a credit score as high as mine. So that's pretty special all on its own, especially after many years of living paycheck to paycheck and being in debt.

Should you cancel that old credit card?

If you have a credit card account that is no longer serving you, you might be considering canceling it. But should you? Evaluate the following factors to decide.

• Does it have an annual fee? If it does and you're not using the card enough to make paying the fee worthwhile, you should at least see if the issuer will waive it -- or consider closing the account.
• Does it have a high credit limit? If it has a limit that makes up a significant portion of your overall credit limit across accounts, maybe think twice about closing it.
• How's your credit score? If it's already in the "very good" or "exceptional" category, the potential loss of a few points (especially on a temporary basis; it's likely that your score will rebound inside of a few months) shouldn't be a deterrent to closing an account you're not using or that is costing you money in the form of an annual fee.

If you're otherwise making the right moves with your credit (keeping balances low, or ideally, not carrying credit card debt at all, and paying bills on time every time), and have a long enough overall credit history, closing one account is unlikely to do too much damage to your credit score. For me, having one fewer account to manage (and one fewer annual fee to pay) is definitely worth it.