One of the most common misconceptions about personal credit is that closing credit cards, particularly accounts you don’t use, is a good idea. If you close an “established” account, especially if it has been a satisfactory (always paid) account for over two years, it will lower your credit scores. Why does this happen? The reason is that 15% of your credit score is computed from the “length of credit history,” which is the time since accounts were opened and the time since account activity. Hence, people with credit accounts in good standing for a long time typically have the highest credit scores.

If you close a seasoned credit account, you lose the ranking and value this account had in the calculation of your credit score. How much could it go down? Well, that depends. However, because the FICO credit score range is 550 points (300-850), the most it could reduce your score should be 82 points (15% of 550). That is a huge hit to take and would almost certainly bring your credit rating down so far that you would pay higher interest rates on any new accounts you open. If your credit issuer applies “universal default,” you could even find yourself paying a higher interest rate on existing accounts that are in good standing!

The only valid reason to close an unused account is risk: Either you’re worried about someone stealing the numbers and committing fraud, or you fear you’ll overspend if you have the card available. Well, your fraud protections on credit cards are actually quite good, as long as you check your statement and report acts of fraud quickly. As far as overspending goes, that’s a personal choice — just be aware of the negative impact of closing accounts.

The bottom line is, you want to avoid closing out older credit card accounts, since your credit score will go down.