Multiple sources say that if you have several credit cards with balances, and you pay down one of them, your credit rating will take a hit if you close that card. Now I know what the stated reason is -- credit agencies factor in the ratio of your total debt to your total available credit limit, so if you close out a zero-balance credit card, your ratio of total debt to total credit limit has gone up. However, I'm arguing that it doesn't make any rational sense for them to penalize you for that.
In some cases, if A and B have the same debt but B has a lower credit limit, it's rational to give B a lower credit score. If A has a $50,000 credit limit is usually $25,000 in debt, but B has a $30,000 credit limit and is usually $25,000 in debt, then it's likely that A has some degree self-control, while B doesn't stop spending until they almost "hit a wall".
However, that's not what we're comparing. Suppose you have a credit limit of $50,000, and you've just finished paying down your debts from $40,000 to $25,000. You have two cards with $10K limits that you just paid down, and you're trying to decide whether to leave them open (be like A), or close them (be like B). Ignoring the credit rating, the rational choice is to close them -- every additional card is an additional risk of identity theft, an additional relationship to manage, an additional source of temptation, and (sometimes) an additional annual fee. But the rating agency punishes you for doing the sensible thing here. And they penalize you even though they can see your history, so they know you're someone who is paying down your cards and closing them -- as opposed to someone who started with a $30K limit and then ran up their cards until they "hit the wall".
So it makes no sense to me that a person who has paid down part of their debts, and wants to reduce their risk and fees by closing a zero-balance credit card, would be penalized for this. Am I missing something, or is this just a counterproductive rule of the rating agencies that everyone accepts because "it just is"?