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If you haven’t heard already, several large credit card issuers (Chase, Washington Mutual, Citibank, Capital One, HSBC) are currently closing millions of consumers’ credit cards without prior warning due to inactivity. This is their legal right, but it can also negatively affect your credit score. Here’s why and some steps that you can do about it:

How Can Closed Credit Cards Affect My Credit Score?

FICO has previously revealed the following breakdown of factors considered in credit scoring. We can also read between the lines of the questions asked by the free FICO Score Estimator by myFICO.

Capacity used. This simply means how much of your available credit you are using, sometimes referred to as utilization ratio. A lower ratio is better, either by lower balances or higher credit limits. If you’re maxed out on all your cards, obviously that’s not a good sign. Logically, closing credit cards means you have less available credit.

Length of credit history and past credit applications. To be specific, not the only length of your oldest line, but also the average age of all your accounts matters. In addition, you’ll have less need for new credit applications if you can keep your existing purchasing power.

Closed by creditor or consumer? A lesser concern is whether the account is marked as “closed by creditor” as opposed to “closed at consumer’s request”. Since FICO doesn’t release the details of their scoring algorithm, it is still debated whether this matters to the numeric score. Some credit repair experts…