Is It Better for Your Credit Score to Close a Zero Balance Credit Card?

Lose Good Credit Reporting

When you have a credit score with no balance, the credit card company will report the card as being current every month, which will contribute to a positive credit score. In addition, your credit score will also benefit because you have a lower debt to available credit ratio.

Too Many Cards

The Motley Fool warns that the FICO scoring algorithm, the most widely used credit scoring model in the United States, penalizes people who have over seven credit cards.

Bottom Line

The Fair Isaac Corporation, the company that created the FICO credit scoring algorithm, warns consumers not to "close unused credit cards as a short-term strategy to raise your score." If you have more than seven cards, you may want to close some accounts, but you have better ways to raise your credit score that closing accounts with zero balances.