Close Unused Credit Card Accounts-Identity Theft Prevention Tip

When it comes to identity theft prevention, there is really no cure-for-all type of prevention strategy.  It is really a combination of various strategies that you have to implement.

A lot of Identity Theft Prevention Experts will tell you that Credit Freeze is the cure for all, but it really isn’t.  Yes, Credit Freeze is an effective tool in preventing new account fraud.  But it isn’t effective in preventing other types of Identity Theft and Fraud.  And it sure isn’t effective in preventing existing account fraud.

In addition to using Credit Freeze, I suggest using the following strategy.  I know I am going against the grain here; and I can already see the financial advisers and experts getting upset over my advice, but you should decide for yourself if this strategy works for you.

Close unused credit card accounts!  It is as simple as that.

The reason financial experts may get a little uptight over my advice is the fact that, by closing accounts, you might lower your FICO score.

There are a few factors that go into calculating your FICO.  One of the key factors is “utilization ratio”.  What it basically means is the total balance you owe is calculated as a percentage of the total credit limit. Simply, it is the ratio of Credit Balance to Credit Limit.

When you decide that you don’t need those unused credit card accounts, here are just a couple of quick tips to make sure that the negative impact on your FICO score is minimized:

  1. Before you even think about closing any of your accounts, make sure to pay down the balances you owe on the accounts you use, in order to widen that gap between balances owed and credit limit.  Utilizing about one-third of your available credit should be optimal in maintaining a higher score.
  2. Close the more recent accounts and keep the accounts you’ve had for a long time.  The overall length of your credit history and the length of individual accounts are the important factors in FICO score calculation as well.

Of course, closing unused credit card accounts will not prevent existing account fraud, but it will most definitely minimize financial damages.

What do you think about closing unused credit card accounts as an identity theft prevention strategy?  Leave a comment!

About the Author

Lana is a real life Identity Theft Victim. Identity Theft Manifesto is a result of her own struggles to clear her credit, her name and reputation. She is on the mission to research, learn more and educate her readers about ID Theft Crime.