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Valued Contributor
Posts: 946
Registered: ‎01-21-2012

Re: O/T...Do you cancel/close credit cards?

When I was younger I closed a few credit cards thinking I was doin Good and I later learner my credit score was lower when I tried to get a loan at the credit union. Don't make my mistakes.
Super Contributor
Posts: 391
Registered: ‎06-19-2011

Re: O/T...Do you cancel/close credit cards?

On 1/1/2015 annabellethecat said:

But it still counts AGAINST your credit. Because the theory is that you can POTENTIALLY use those cards again and run up your bills.

The more money you owe, the better for your rating. As long as you make the right monthly payments and don't make any late ones.

It's all dumb. Just pay case.

I worked for a credit counseling agency and I can tell you that there are a couple or errors above and in other posts by other posters. Number one, DO NOT CLOSE THE ACCOUNTS. The best thing, believe it or not is to keep them active. Every 6 months or so, charge a thing or two and pay it off completely that month. Then do it again, etc. Then rotate to the next rarely used card, etc. It gives you plenty of positive "pays on time" ratings from the agencies that increases your score.

Also, as long as you have a decently high limit and keep the amount you owe low (the small percent of what you could potentially use) your ratings will be high. SO, THE MORE YOU OWE ON A PARTICULAR ACCOUNT (near the limit) THE WORSE IT IS FOR YOUR SCORE. Try to never owe , rollover from month to month, any more than 20% of the limit on any card. People who stay close to their limits make their scores plummet. I believe that "Potential" useage is only considered against you these days 1) if you already have a poor score or 2) occasionally if you are buying a house. It used to be that you had to close many things before being accepted for a mortgage but, I don't think it's that way anymore.

Also, DO NOT OPEN STORE CARDS. They actually are ones that may count against you. Because they have high interest rates and are easiest to acquire, they are looked upon as "junky credit" and should only be used by young people to initially establish their first credit card.

Respected Contributor
Posts: 2,938
Registered: ‎12-07-2012

Re: O/T...Do you cancel/close credit cards?

This is the height of hypocrisy. The credit reporting agencies, which use some Byzantine method for assigning a number to the so-called credit "history," all reduce the score when the amount of credit is reduced by a card holder voluntarily closing a card.

Unless you intend to be in the market for credit during the next year (or want to change insurers, since underwriting relies in part upon credit score), I think the risk of keeping open cards these days far outweighs any impact upon the credit score.

Respected Contributor
Posts: 3,958
Registered: ‎09-28-2010

Re: O/T...Do you cancel/close credit cards?

I'm not an expert by any means, but have picked up a few good tidbits over the years.

If you are carrying balances on ANY cards, then it's unwise to close any of your existing accounts. Part of your credit rating is based on amount of available credit and the percent of that amount used. Obviously if you close an account, then the balance you are carrying on other accounts now is a higher percentage.

There are different types of inquiries on your credit. Inquiries that are initiated by you when you take out a new loan or open an account or request an increase on your credit limit will knock points of your rating. Inquiries NOT initiated by you do not damage your credit rating (these are those pre-screened offers you get, or offers to you from an existing creditor who is looking to do more business with you). Those will only have an impact if you accept the offer.

If you plan on keeping your cards open, then you should use them for a small amount at least every few months. Pay it in full when the bill comes. If you don't use an account for a long period of time, it will be closed.

Never take any card over 40% of the credit limit.

Honored Contributor
Posts: 10,752
Registered: ‎08-03-2013

Re: O/T...Do you cancel/close credit cards?

This is something I know a little about. I have four credit cards that I rarely use; however, I know that if I close them it will affect my credit rating. It's easier to explain using real numbers. If you have ten credit cards and all of them have a limit of $1,000 you have a total credit line of $10,000. If you close four, your credit line decreases from $10K to $6K. Potential creditors don't look at why but what so all they will see is that you loss $4k of credit worthiness. If for whatever reason you just have to get rid of those cards, do it slowly. Going from 10K to 9K is not significant but even that will affect your credit score for a minimum of six months.

Those four cards that I would like to close all have very high limits so I use them each once a year on something less than $50. I pay the charge immediately - even before the bill arrives. I keep a list of when I last used a card so that when I have a minimal purchase, I can look at the list to see if it's time to use one of those four cards. I only have one card that I keep a balance on. The reason I do is because when I owed nothing, my credit score started to drop. Creditors want you to have debt. Do it responsibly.

"Suddenly you just know it's time to start something new and trust the magic of Beginnings..."
Trusted Contributor
Posts: 1,930
Registered: ‎03-13-2010

Re: O/T...Do you cancel/close credit cards?

Here's an article that addresses the issue, from a reliable website, bankrate.com:

http://www.bankrate.com/finance/credit/closing-credit-card-good-or-bad.aspx

We've closed a few credit cards over the years, ones we no longer used and considered "nuisance accounts." If it affected our credit score, we didn't notice.

However, we would never close the accounts we've had the longest. Length of relationships, and a long history of on-time payments, are positives in credit scoring.

Esteemed Contributor
Posts: 5,839
Registered: ‎04-14-2013

Re: O/T...Do you cancel/close credit cards?

It seems to me that potential creditors also examine your liquid net worth. If they bother you enough about your credit score, then if you can, just bypass them and pay it up front.

I never buy into the "credit card discount for a day" schemes - the inquiries on your report are detrimental as well.

We have two cards that we pay off each month. Have had them for years. The FICO system is garbage, in my opinion. I used to be a mortgage banker, and yes, times have changed since I was in it, but we do not have to accept unreasonableness or security risks simply to please "the man".

Cogito ergo sum
Trusted Contributor
Posts: 1,644
Registered: ‎03-14-2010

Re: O/T...Do you cancel/close credit cards?

I keep them & just don't use them.After a specific period of time that the card isn't used, the retailer will cancel the card for non-use.

Super Contributor
Posts: 1,050
Registered: ‎11-13-2014

Re: O/T...Do you cancel/close credit cards?

I use each one once or twice a year just to keep it active..
Super Contributor
Posts: 403
Registered: ‎09-03-2010

Re: O/T...Do you cancel/close credit cards?

I do NOT ever cancel the cards or close the accounts.

Why trash your credit/FICO scores?