Most Americans have a number of credit cards that remain unused, and they are lured by the lucrative rewards for signing up along with promotional 0% APR offers and bonuses.  Most often we end up applying for new credit cards that we don’t require and end up with a host of unused credit cards.

Americans have cut back on the credit card usage as part of a measure to cut down on their finances.  Hence, even if you don’t use a particular card, it would be wise to rethink the decision to close a card account as it could have other consequences on the credit score.

However, if you are still keen on closing a credit card account, there are some important things to consider if you want to avoid lowering the credit scores.

The credit utilization ratio gets affected the minute you close your card. There is no penalty for closing a card as per the FICO scoring system. But canceling a card can have a negative consequence if you are not cautious.

The first thing that you will have to consider before closing your card is how it could impact your credit utilization ratio. The total credit utilization ratio would be the percentage of available credit which you would have used on all your credit cards. It accounts for about 30% of your FICO score and is the second most important factor other than paying your bills on time, which will account for 35% of your FICO score. So, think twice before closing your card.