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Alli06
Baby #3 coming this June
Member since 8/05 6721 total posts
Name:
A
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Question about cancelling credit cards?
I was about to cancel a few credit cards that I don't use at all, but then I heard it affects your credit history. I have good credit and I don't want to ruin it. Most of them are store credit cards, not sure if that make a difference.
Message edited 1/19/2009 12:18:12 AM.
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Posted 1/18/09 10:42 PM  |
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KateDevine
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Member since 6/06 24950 total posts
Name:
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Re: Question about cancelling credit cards?
I've heard that if you've had the cards for a long time it is better to keep them open, and use them for like, a tank of gas and pay it off every month then cancelling them.
I don't know if that is still true though.
And I don't know about store cards, I'd think they would, right?
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| Posted 1/18/09 11:02 PM |
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MelBobby
LIF Infant
Member since 11/08 292 total posts
Name:
Mel
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Re: Question about cancelling credit cards?
Do not close credit cards..just keep them open. It will affect your credit score.
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| Posted 1/19/09 12:11 AM |
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Angel321
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Member since 4/08 15553 total posts
Name:
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Re: Question about cancelling credit cards?
keep them open...it improves your credit rating to have open lines of credit in good standing.
(this from our financial advisor)
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| Posted 1/19/09 12:42 AM |
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VickiC
Rocking the party
Member since 5/05 4937 total posts
Name:
Vicki
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Re: Question about cancelling credit cards?
If they are store cards you don't use, I would close them. As long as you have a "regular" CC that you've had for a while, I don't think closing a store CC will really do anything to affect your score.
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| Posted 1/19/09 8:53 AM |
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DayDay
Livin' the Good Life....
Member since 9/06 5939 total posts
Name:
Dayna
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Re: Question about cancelling credit cards?
If you close your cards even if you don't use them, it will affect your total revolving availability and thats about 35% of your score.
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| Posted 1/19/09 9:14 AM |
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Erica
LIF Adult
Member since 5/05 11767 total posts
Name:
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Re: Question about cancelling credit cards?
closing credit cards hurts your FICO score, b/c you lower your debt to credit ratio.
let's say you owe $2000 on one card, but all of your cards have a $10000 limit. you are only using 20% of your credit. If you close the other cards and bring your credit limit to $5000. you are now using 40% of your credit and are almost maxed.
edited for bad math - ignore where I was quote below!!! 
Message edited 1/19/2009 2:54:30 PM.
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| Posted 1/19/09 9:30 AM |
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azoodie
Member since 8/05 8377 total posts
Name:
Team SEXY BACK
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Re: Question about cancelling credit cards?
Posted by Erica
closing credit cards hurts your FICO score, b/c you lower your debt to credit ratio.
let's say you owe $2000 on one card, but all of your cards have a $10000 limit. you are only using 20% of your credit. If you close the other cards and bring your credit limit to $5000. you are now using 67% of your credit and are almost maxed.
ITA.
Therefore, if you don't have ANY balances on any of your other credit cards I would close them. It would not affect your debt to credit ratio since your debt is essentially zero.
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| Posted 1/19/09 10:28 AM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Question about cancelling credit cards?
Posted by VickiC
If they are store cards you don't use, I would close them. As long as you have a "regular" CC that you've had for a while, I don't think closing a store CC will really do anything to affect your score.
It doesn't matter if its a store credit card vs. a major credit card. Store credit cards report the same way on your credit report as major credit cards do.
Don't close any credit cards. Some of my oldest accounts on my CR are store credit cards.
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| Posted 1/19/09 11:50 AM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Question about cancelling credit cards?
I just cut them up- never close them
macy's is my oldest card- I never use it - but I wont close it
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| Posted 1/19/09 1:51 PM |
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Erica
LIF Adult
Member since 5/05 11767 total posts
Name:
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Re: Question about cancelling credit cards?
Posted by azoodie
Posted by Erica
closing credit cards hurts your FICO score, b/c you lower your debt to credit ratio.
let's say you owe $2000 on one card, but all of your cards have a $10000 limit. you are only using 20% of your credit. If you close the other cards and bring your credit limit to $5000. you are now using 40% of your credit and are almost maxed.
ITA.
Therefore, if you don't have ANY balances on any of your other credit cards I would close them. It would not affect your debt to credit ratio since your debt is essentially zero.
It does since it takes away some of your credit limit.
Suze Orman says never ever close any cards
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| Posted 1/19/09 2:56 PM |
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azoodie
Member since 8/05 8377 total posts
Name:
Team SEXY BACK
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Re: Question about cancelling credit cards?
Posted by Erica
Posted by azoodie
Posted by Erica
closing credit cards hurts your FICO score, b/c you lower your debt to credit ratio.
let's say you owe $2000 on one card, but all of your cards have a $10000 limit. you are only using 20% of your credit. If you close the other cards and bring your credit limit to $5000. you are now using 40% of your credit and are almost maxed.
ITA.
Therefore, if you don't have ANY balances on any of your other credit cards I would close them. It would not affect your debt to credit ratio since your debt is essentially zero.
It does since it takes away some of your credit limit.
Suze Orman says never ever close any cards
I have to disagree with this.
I was watching Suze Orman's webcast the other day and she answered a question about closing an account. This lady had no balance on her accounts so Suze told her it would not negatively affect her score to close it.
Think about it...if you owe zero and your credit line is $10,000 your debt to credit ratio is the same if you owe zero and your credit line is $5000.
If you don't carry a balance on any card, you can close as many accounts as you'd like without hurting your score.
However, it's best to keep longtime accounts. It would be better to close more recent unused lines of credit first.
Message edited 1/19/2009 3:11:09 PM.
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| Posted 1/19/09 3:10 PM |
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Alli06
Baby #3 coming this June
Member since 8/05 6721 total posts
Name:
A
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Re: Question about cancelling credit cards?
Thanks for the info!! I called the cards to see if they where still open. Only two where closed. I have no balances on any of them. I decided just to file them away and not use them. I don't want to ruin my credit.
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| Posted 1/19/09 7:36 PM |
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Re: Question about cancelling credit cards?
Posted by azoodie
Posted by Erica
Posted by azoodie
Posted by Erica
closing credit cards hurts your FICO score, b/c you lower your debt to credit ratio.
let's say you owe $2000 on one card, but all of your cards have a $10000 limit. you are only using 20% of your credit. If you close the other cards and bring your credit limit to $5000. you are now using 40% of your credit and are almost maxed.
ITA.
Therefore, if you don't have ANY balances on any of your other credit cards I would close them. It would not affect your debt to credit ratio since your debt is essentially zero.
It does since it takes away some of your credit limit.
Suze Orman says never ever close any cards
I have to disagree with this.
I was watching Suze Orman's webcast the other day and she answered a question about closing an account. This lady had no balance on her accounts so Suze told her it would not negatively affect her score to close it.
Think about it...if you owe zero and your credit line is $10,000 your debt to credit ratio is the same if you owe zero and your credit line is $5000.
If you don't carry a balance on any card, you can close as many accounts as you'd like without hurting your score.
However, it's best to keep longtime accounts. It would be better to close more recent unused lines of credit first.
I agree with this. Can I add that closing accounts is not going to have as bad an effect on the score as missed or late payments? I have closed many accounts on principle simply because the bank got media attention for doing something that I didn't agree with, or even when the bank has tried to screw a client of mine. I have closed other accounts because I would never use the amount of credit open to me and I was once a victim of ID theft, so I figure that I should not leave a ton of open credit for people to steal if they ever get a hold of my cards. My credit score is excellent. I am sure it might be a few points higher if I did all the tricks of the trade for keeping credit scores up, but my score still reflects the fact that I have had credit available to me for many years and never abused it and never came close to maxing out. I'd also like to point out that when I was younger, I opened cards just to start a credit history but everyone told me I had to use them more often to get a good credit score. I did not find that to be the case.
I am sure that some people reading this think that I will be in for some surprises as the credit credit industry changes. I may stop closing accounts because if I ever need the credit, it might be tougher to get it. I still think that closing accounts is not as harmful as really abusing credit. BTW, when you finish a car loan or a student loan, your score gets a very nice boost. I didn't have those loans for the sole purpose of creating a credit score, but I guess it can be done.
I'm not sure if I explained my thoughts on this properly. I'm not saying that things you do to raise your credit score do not work. I am just saying that if you do not do not do these things but you are reliable with credit, you will probably not have a hard time with your score. However, the game changes a little if you have a negative credit history but that's a different topic. (FYI--This post is not be construed as legal advice).
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| Posted 1/19/09 8:10 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Question about cancelling credit cards?
Posted by azoodie
Posted by Erica
Posted by azoodie
Posted by Erica
closing credit cards hurts your FICO score, b/c you lower your debt to credit ratio.
let's say you owe $2000 on one card, but all of your cards have a $10000 limit. you are only using 20% of your credit. If you close the other cards and bring your credit limit to $5000. you are now using 40% of your credit and are almost maxed.
ITA.
Therefore, if you don't have ANY balances on any of your other credit cards I would close them. It would not affect your debt to credit ratio since your debt is essentially zero.
It does since it takes away some of your credit limit.
Suze Orman says never ever close any cards
I have to disagree with this.
I was watching Suze Orman's webcast the other day and she answered a question about closing an account. This lady had no balance on her accounts so Suze told her it would not negatively affect her score to close it.
Think about it...if you owe zero and your credit line is $10,000 your debt to credit ratio is the same if you owe zero and your credit line is $5000.
If you don't carry a balance on any card, you can close as many accounts as you'd like without hurting your score.
That's assuming you have no car loans, no student loans, no personal loans, no lines of credit open.
Credit cards are not the only factor in calculating your debt to credit ratio.
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| Posted 1/19/09 9:04 PM |
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LittleBlueBug
Happy Mommy
Member since 9/06 4074 total posts
Name:
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Re: Question about cancelling credit cards?
What it also comes down to is credit history. If you have a zero balance, keep the cards open...maybe buy something small once in a while...and pay it off right away. This way it establishes long term credit history. Also, closing a card does not look good on credit...speaking from first hand experience, it's better to keep it open and not use it or use it and pay it off immediately.
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| Posted 1/19/09 10:55 PM |
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Re: Question about cancelling credit cards?
We're having a similar discussion on a list serve that I belong to. A very well trusted attorney mentioned 2 things to consider:
1. It will look better for a borrower to close an account than for a creditor to close it.
2. Credit scoring is a trade secret of the scoring agencies. So, we can all have our theories.
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| Posted 1/19/09 11:29 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Question about cancelling credit cards?
Posted by Kerie-is-so-very
1. It will look better for a borrower to close an account than for a creditor to close it.
This is overrated IMO. First off, banks are closing accounts left and right now in this credit crunch era. So even if it was worse for a creditor to close an account, at this time it really won't make much of a difference now.
Plus I have had a bunch of my own credit cards closed by banks. It has never hurt my credit, as I routinely get credit line INCREASES when others are getting their limit slashed by banks.
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| Posted 1/19/09 11:37 PM |
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Nifheim
allo
Member since 1/09 5476 total posts
Name:
Jennifer
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Re: Question about cancelling credit cards?
personally I canceled all cards after being paid off 100% and not wanting to use them. I have a many things that are in benefit to me for my credit score such as paid in full student loans, car loan, open and current car loan, two credit cards that i pay on time and full. I have savings, etc.
I find if you keep things open they have a chance to be stolen which had happened to my parents and they didn't catch it quick enough since they just shredded the card and never paid attention to the account.
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| Posted 1/20/09 9:45 AM |
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