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Why closing a high-limit unused card can hurt (first half). Closing an unused card with a high credit limit reduces your total available credit while leaving outstanding balances unchanged. Because credit utilization equals total balances divided by total credit limits, shrinking the denominator (total limit) raises the utilization percentage — sometimes substantially — and that higher utilization can lower your credit score. People often close old or unused accounts thinking it “cleans up” their report, but the immediate arithmetic frequently backfires if the closed card had a significant limit. In addition, older accounts contribute to the average age of accounts, and while closed accounts may still count toward history for a time, removing an account from active use can later shift averages and change how scoring models view your experience.

How to proceed instead and risk-management (second half). Before closing a card, consider alternatives: keep the card open and use it for a small recurring charge you pay off each month; request a lower credit limit reduction if account fees or risk is a concern; or pay down balances on other cards first so utilization falls. If you must close the account (for example because of high fees or fraud risk), pay down balances before closing to avoid a utilization spike. After closure, monitor your credit report to see how utilization changes and be prepared to explain closed accounts to lenders if needed. In short, closing a high-limit unused card is often a quick way to unintentionally raise utilization and damage score — treat it as a last-resort move.

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By Quiz Coins

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