Q. Is it better to close credit cards you no longer use or leave those available lines of credit open? I have heard both sides of this story.

A. Your credit score is computed using a formula created by Fair, Isaac and Co., a firm started by Bill Fair and Earl Isaac. Nearly 50 years ago, they figured out that if they could collect enough information about a person's credit history, they could calculate how likely that person would be to miss a payment or default on a loan.

That risk is represented by what is called your FICO score. The higher the score, the lower the risk. While it is theoretically possible to earn a "perfect" 850, a score in the 700s is considered good or excellent. If your FICO stands in the low-600s, however, you have trouble.

Each score is calculated using 22 different variables from your credit history. One of those variables is how much of your available credit you have used. So if you have five credit cards with a total balance of $10,000, your score will be higher if you have $30,000 in available credit than if you have only $20,000 in available credit.

It's impossible to know how much higher, however, because the exact formula is a closely guarded secret. So, if you have a good score and never carry a monthly balance, then why not cancel an unused card? Even if your available credit falls, the percent of available credit you've used will remain zero.

If you have an above average score and are carrying a modest balance of a few thousand dollars, canceling an unused card could hurt you a little. Your available credit will drop and the percent of available credit you've used will increase. But it could still be advantageous to close unused accounts because the fewer credit cards you have, the lower your risk of identity theft. And identity theft is a big problem.

If you have below average credit and are carrying a substantial balance on your cards, then don't cancel unused cards. You shouldn't do anything that might further lower your score.