Will closing a gasoline credit card significantly impact my credit history?
I would not make financial decisions based on worrying about credit scores. I think the obsession about credit scores is a ploy on the part of the credit agency marketers. The real determinant of credit rating is your payment history — missed payments, late payments, defaults, etc. and the amount of debt you carry. The rest is small potatoes.
Closing it isn’t likely to make a huge difference in your FICO, because average age of accounts makes up a relatively small part of your credit history, provided your average age after closing is still >2 years. Likewise, if the available credit on that card is less than ~20% of all your open credit lines, closing it won’t affect your score much either. However, having it open certainly won’t hurt your score, so unless you’re worried about fraud of some sort involving that card, I wouldn’t close it.
It will also affect your overall “utilization” level (i.e. the ratio of your revolving credit limit vs. your total balances), which affects your FICO scores. The more available credit you have, and the less relative debt you have against that credit, the better your scores will be. Unless you’re being charged an annual fee for the card, theres no good reason to close it. People on the (required reading) Creditboards forums call such cards (as well as totally worthless credit cards such as Capital One) “sock drawer” cards. Stick em in a box, and forget about ’em.
Is there a reason to close the account, rather than just leaving it open and getting a second credit card? If you’re worried about having too much credit open, ask them to reduce your credit limit. If you’re worried about spending money you don’t have, cut the card up (or freeze it in a cup of water) and keep the account open without using it. But I’d say you’re better off keeping the account open and then opening a new account to actually use. If you do close it, you’ll probably take a small credit hit (depending on how old your other accounts are and how much total available credit you have). But if you’re not planning to make any huge purchases anytime soon, I wouldn’t worry about it too much.
