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LEARNING CENTER: Credit Scoring Myths

Myth: When you close a credit card account, your credit scores will always go down.

Fact: While it is possible for your credit scores to go down as a result of closing a credit card account, it’s not a definite.  The reason your scores could go down would be due to the loss of the credit limit of the newly closed card in your debt-to-credit limit ratio measurements. If you are carrying debt on other credit cards then your debt-to-limit ratio, which is calculated by dividing your aggregate credit card debt by your aggregate credit limits on open credit cards, will likely go up. This can cause your credit scores to go down. However, if you are not carrying debt on other credit cards or the credit limit on the newly closed card was modest enough then the account closure may not result in a change in your debt-to-limit ratio sufficient to result in a score reduction.

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