Never Close Your First Credit Card Account. Here’s Why

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The age of your credit history is one factor that makes up your credit score. Learn how closing an older credit card account could impact your credit score. 

There may come a time when one of your credit cards no longer meets your needs. But before you cancel a credit card, consider how that choice could impact your credit score.

When you close a credit card that is in good standing, the account can remain on your credit report for several years. However, eventually it will be removed from your credit report. Closing the oldest credit card in your wallet could eventually result in a lower credit score. So instead of canceling the account, you may want to keep your first credit card account open.

The length of your credit history matters

In the United States, your credit score is viewed as an indicator of financial health, and it can significantly influence what lending opportunities are available to you. Several factors determine your FICO® Score. Knowing what factors affect it can help you make financial decisions that benefit your credit score.

Here are the factors that determine how your credit score is calculated and the percentage that each factor influences your score:

Payment history: 35%Credit utilization ratio: 30%Age of credit history: 15%Credit mix: 10%New credit inquiries: 10%

While not the most significant contributor to your credit score, the age of your credit history matters. This is averaged from the age of all your credit accounts. Additionally, the age of your newest credit account and the time since using each account is examined. In short, a lengthy credit history is a win for your financial health. That’s why if you still have your very first credit card in your wallet and are considering canceling it, you may want to reconsider that idea.

What to do if that credit card has an annual fee

You may be looking to close the account to avoid paying the yearly fee. There’s another option to consider, though. Instead of asking your credit card issuer to cancel the card, you might ask the issuer if you can downgrade the card or switch to a no annual fee credit card.

Doing this will save you money on extra fees, and the account will continue to show on your credit report. The main advantage to doing this is it can contribute to the age of your credit history. That’s why you shouldn’t be in a hurry to close an older credit card account if you can avoid it.

Don’t neglect your credit

It can be easy to ignore your credit as you navigate everyday life, especially when things get busy. But caring about your credit history is essential. You’re not alone if you have work to do to increase your credit score. Many Americans are in a similar situation. The good news is it’s possible to make progress.

Here’s why your credit matters: A good credit score can give you better financial opportunities, like the chance to qualify for a lower interest rate for a loan. A low credit score could make qualifying for more desirable financial opportunities difficult. A poor credit report can also impact other areas of your life, like making it challenging to get certain jobs or approval to rent a home or apartment.

As you make everyday financial decisions, don’t forget to consider how your choices will impact your credit. Using credit cards responsibly is one way to build credit and increase your credit score. Do you want to improve your financial health? Check out these free personal finance resources to learn more.

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