Community Chat

[sunshine45]

interesting question.

OLD NAVY just closed my card due to inactivity......and i was wondering if that will change my credit score at all.

[CelticCrafter]

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@SilleeMee wrote:

If your score is NOT important to you then close the unused accounts. Otherwise just don't use them. They eventually will expire.

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But they just keep re-issuing new ones when they do expire.  It's taken at least 10 years for Chase to decide to close one that we haven't used in that long.

At 62 years old we really don't care if the score takes a ding because at this age we aren't looking for a mortgage or a car loan.  

[Maudelynn]

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@SahmIam wrote:

@Maudelynn  This is what I remember from years back. I read an article in the WSJ recently discussing how banks now look at open lines of credit as a negative because you MAY go into debt and not be able to pay off your current debt load so... DING!

One of the links in this thread I had happen to me: by not using my card, my limit was lowered and my score went down by a few points. I wind up charging a candy bar every few months just to have it show as being in good standing. Sure enough, the limit was raised very quickly to what it once was.

I hate this stuff, lol.

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@SahmIam Banks do take into consideration the possibility of a customer being able to use every cent available to them on lines of credit.  However, if you have a pattern of paying off or keeping low balances, when a lender qualifies you for a loan, most no longer assume a payment at the maximum balance possible.  They will qualify you based on what the credit report shows is your monthly payment, regardless of the amount you could charge.  On Home Equity Lines of Credit, most banks will qualify you based on the entire amount of the line and at a "stressed" (higher rate as most HELOC rates are variable) rate, so they do look at the worst case scenario when it comes to lines of credit attached to your real estate.

[LilacTree]

Coincidentally, I was talking to a credit advisory rep yesterday because of the CareCredit loan I just took out for the remainder owed on the dental work I am undergoing.  I know my FICO score will go down because of this loan and wanted to know how to handle this as efficiently as possible.  He gave me some good information.

This loan is 0% for 24 months, but I intend to pay it off in one year.

We talked for a good 15 minutes during which I told him I had three credit cards with zero balances and asked him if I should close them.  He said "no" very emphatically . . . that closing them would lower my FICO score even more.  So I will not close them.  He advised me to just leave them alone, as they will increase the "utilization" ratios on my credit report which is the second most important factor, just under "payment history," which mine is 100%. 

I am not advising anyone to do that, just reporting my experience yesterday.

[Imadickens]

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@SahmIam wrote:

@ Everyone   This is why I asked because I'm getting so many different answers, even from my bank. I've gone online and the info there is.... conflicting. I've read and been told and seen on my own report that you get a ding for opening a card (the company looks at your report  so DING!) and you get a DING! for closing it as well. I think it was the Motley Fool who said closing your own card looks like you believe you can't handle the open credit so banks look at it negatively. If you just leave it there until issuer closes it, it shows discipline and therefore, no DING!

I don't want any DINGS!, lol.  Same thing with a credit transfer: if you open a new CC.. DING!, transfer the balance and then close the other card.. DING! Two negatives. But I often think that's because banks WANT you to pay the interest so they make more money and... yeah.

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What I understand is that your credit score is based in large part on the ratio of available credit to income. So, if I'm correct, someone who makes $50,000 annually and has available credit of say, 10,000 on open, unused credit cards, would have a higher credit score than someone who has $100,000 income and $15,000 of credit, maxed out. However, I think keeping one Visa type card, maybe two department store cards (you often get discounts using them. When you do, tho, pay balance off right away!), and maybe a few gas cards. I would not keep a balance on any of them unless it's a twelve month, no interest to buy furniture or appliances.

[Pook]

From experience I found out it's better to just not use it rather than closing it.  I paid off 2 cards and had another I never used so I closed all 3 and my score plummeted because of it!  It's better to have a high credit available so if you use any type of credit the percentage of credit used will be lower.

[momtochloe]

Wow, this thread is really an eye opener for me!  I had no idea closing a line of credit would impact your rating as my concern was always about someone hacking and abusing that particular line of credit . . . yikes!

[Imadickens]

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@lulu2 wrote:

Some say you should not close accounts but I closed a bunch of them we do not use.  If it affected our credit, I do not see it. At our age, I really do not care if our credit score goes down. 

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I think as long as you didn't close all of them! I think that's because some creditors make people close accounts if they receive consolidation loans, which makes them look like poor credit risks ! My only care at my age is buying a new car. Unless you pay cash for one, credit scores affect interest rate!

[Imadickens]

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@Lila Belle wrote:
Times, policies and regulations have changed @SahmIam! It's better to be informed.

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Amen!

[SilleeMee]

Credit Karma's site says that the one big thing that impacts your scores the most is how much of your allowed credit is used (your debt).  They say to keep it under 30% so your score remains stable.