[poundwise]

There are multiple factors that affect your credit score and can be considered when it comes to the question you pose and few absolutes. I would never close a card that has a balance, for instance. However, once a balance is paid, the decision to keep the account open or close it must be weighed according to a few criteria.

1) Do you have other accounts with high balances (relative to available credit)? If so, you may want to keep the paid account open to keep your credit available to debt ratio lower, depending on how many and what ratio. If not, then there is no, or little, harm that will can be done to your credit score by closing the account.

2) Do you intend to use the account ever again? If the answer is a solid no, I'd be inclined to close it, regardless of any other accounts. If the answer is, no, but you have been irresponsible with credit and may (or a spouse may) be tempted to utilize it, then close it, period. If the answer is yes, then obviously, keep it open.

3) How many open accounts do you have? Contrary to popular opinion, there is nothing revealed about credit scoring that states the more, the better. In fact, it is widely held that having too many open accounts can affect you negatively. Not necessarily in a lower score but for purposes of obtaining a mortgage specifically; open/available credit is most often viewed as potential debt and factored in to the underwriting process. Another point on this subject, I recently read an article with the woman who helped develop the current algorithm used by FICO. In it, as I recall, she states that people who are looking for to maximize their score should hold two credit cards and keep the balances below a certain level of utilization (I believe she stated 30%-50%.)

4) Credit scores are funny things. At one time, I had 14 accounts with balances. As I paid them off, I closed them except one. I have that one and one that I am still paying on, which remain open. My score, over the last two years, has risen more than 100 points. Clearly, closing accounts didn't hurt a bit. Ultimately, I wouldn't try to play the game too much. If you don't want/need the card/account, close it once the balance is paid. If you aren't sure, or if you'd rather keep it open until you've paid off other accounts, then keep it open and wait.

5) Identity theft can happen anytime, however, account fraud on an existing account can only happen if the account is open. So, while it is not major concern, it is a potential issue. If someone somehow obtained my old MasterCard number, it wouldn't do them a bit of good. The account has been closed for over a year. If that account was still open, and someone got the card info, then I could be a victim of theft/fraud.