I cannot count the number of times a client has told me that they paid off their credit cards, cut them up and closed them. It’s a painful statement to hear as it’s perhaps the quickest way to destroy your credit and cripple you access to future credit.

When you close your credit cards it has several negative effects. First, you have less open accounts. This is almost always a bad thing (see article “How Many Tradelines Should I Have Open” for details). Secondly, you have less available credit. The less available credit you have, the more your score will fluctuate. If you close all cards then you have no available credit, which has an incredible negative effect on your scores. If you had a balance on the card at the time of closure then you have caused a negative available credit, which is terrible for your credit score. Nine times out of ten, closing all your credit cards will drop your scores so low that you will no longer be able to get approved for any new credit. In effect, you have crippled your ability to get credit. If this happens then you need to rebuild credit, which takes a great deal of time.

If you just closed some accounts then call now to see if you can reopen any of them. Many creditors will let you reopen them within 90 days. Otherwise you have a long road ahead of rebuilding credit through getting a secure credit card and other techniques. On the other hand, perhaps you no longer have need of credit. If you already own a house, own a car, and make plenty of money in a steady, well-paying job then you are doing much better than most people and you can probably get by without it.