Question

Jason currently has six credit cards, each with a $10,000 limit. Three of the cards have balances on them, while the remaining three have zero balances. Jason is debating on whether he should close the three zero-balance accounts. Which option would have the least impact on Jason’s credit score? Responses Close the three zero balance accounts to streamline his finances. Close the three zero balance accounts to streamline his finances. Close two of the three zero-balance cards. Close two of the three zero-balance cards. Combine the three credit card balances to one credit card and close the remaining five cards. Combine the three credit card balances to one credit card and close the remaining five cards. Keep the three zero-balance credit cards and maintain the balances at zero.

Answer 1

To minimize the impact on Jason's credit score, it is generally recommended to keep the three zero-balance credit cards and maintain the balances at zero.

Closing credit card accounts can potentially have a negative impact on credit scores for a few reasons. First, it reduces the total available credit limit, which can increase the credit utilization ratio (the amount of credit being used compared to the total credit available). Higher credit utilization ratios can negatively impact credit scores.

Secondly, closing accounts can also shorten the average length of credit history, which is another factor considered in credit scoring models. Longer credit history generally indicates a more established and responsible credit user, which can positively impact credit scores.

By keeping the three zero-balance credit cards and ensuring that they remain at zero balances, Jason can maintain a higher total credit limit and a lower credit utilization ratio, which can positively impact his credit score.

Closing the three zero-balance accounts or combining the balances into one card could potentially increase the credit utilization ratio and shorten the average length of credit history, which may have a negative impact on Jason's credit score.

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