Credit card accounts are extremely valuable in determining your financial performance. They contribute to a great extent in calculating your FICO score. Hence, you need to exercise caution before closing a credit card account.

Determining whether or not to close the account can be extremely difficult for the consumer since too many closed accounts may affect the credit score adversely. It can make prospective lenders reluctant to offer you a loan. When too many open accounts raise your debt-to-income ratio, too many closed accounts are also likely have the same effect on your score. Closed accounts reduce the volume of credit available to you and thus would push your debt-to-income ratio up.

When you start falling behind on your bills, in an impetus, closing all the CC accounts may seem the only right idea. But before you take the decision, find out below when closing a credit card account is a bad idea.

When you have only one card: Closing the account is particularly a bad idea when you have only one account. Even when the rate on the card keeps mounting, you shouldn't consider closing it. In fact it is advised that the consumer should diversify his credit base and may maintain cards from different lenders.

For your safety, you may avoid transacting on all the cards at a time and use them alternatively.

Don't cancel old accounts: Old accounts are given greater weight while computing credit score. Closing old accounts would shorten the length of your available credit history. Hence, you mustn't consider closing an account that is sufficiently old.

Closing an account with balance: It is another bad credit move. Closing an account with balance may give a wrong idea to the credit bureaus. It would look like as if you have maxed out on the card. It is better to reduce the outstanding balance on the card to zero and then close it.

Credit card with balance left: If you still have available credit on a card, you might not want to close it. Not only would it cause you inconvenience but as it would reduce the amount of available credit to you, it'd be detrimental for your score.

When trying to pay off your debt, you should try to minimize the damage caused to your credit score. The above steps can help you in protecting your credit score when you fight off the debt.