Closing credit accounts can be a good step to take in protecting your credit reputation.  However, before you clean house on your credit cards, you should consider the effects it will have on your credit profile.

There are many reasons for closing credit accounts. Cards get lost, wallets stolen.  Old or unused credit cards seem unnecessary.  Balance transfers offer lower interest rates. And there are those who are happy to cut up their cards because they are finally paid off or even just to avoid temptation.

Whatever the reason for closing a credit account, simply cutting up the card and throwing it away isn’t enough to protect yourself. It is more important now than ever before that you are aware of your credit lines, whether you are using your cards or not.

Even if your credit is perfect, closing unwanted accounts may not be beneficial to your credit score. Keep your overall credit balances in mind when closing lines of available credit. It is better to have a larger amount of available credit reflecting.

As a rule, accounts that have a balance over 35% of their spending limit could possibly adversely affect your credit score.  Keeping several accounts open with little or no balance indicates that you have available unused credit available to you, and you have made good spending choices. High available credit versus low balances is a positive.

You should close a credit account only after you have determined you will have no future use for it. Unless absolutely necessary, you should never close your oldest account, as it is your longest piece of credit history. Closing unused accounts does not necessarily improve your credit score.

Accounts that have any balance at all should be left open. Closing an account with a balance will likely reflect negatively on your credit report, as the balance will be higher than the available credit line.  Even if the account was closed because you chose to stop using the credit line, it is best to pay the card off gradually and use discipline.  If you choose to terminate the credit line, you should do so only after the balance is paid in full.

To avoid becoming a victim of fraud or identity theft, you should confirm that your credit lines are closed properly. If you inform the issuer’s customer service department by telephone that you would like your account closed, make sure to follow with a written request sent via certified mail. Your request should specify that you would like a written confirmation of account closure.

After two statement cycles, between 30 and 60 days, you should confirm that the account has been closed. Verification of accurate account closure on your credit reports should be your final step. Your report should reflect “account closed by consumer,” an important distinction to have on file.

While a simple customer service telephone call will probably accomplish this task, it is best to follow through to ensure that your credit and identity are protected. Even though your account is closed, destroy the card completely.