to close a credit card or not to help score

[SentraStyle 10+ year member]

Keep it open...if you close it, you will lower your credit/debt ratio which will lower your credit score.

 

[SRim23 5,000+ posts]

that all depends. this is what i know. the bank will look at your available credit on the cards that have 0 balance. lets say you have 5 or 6 cards with limits of 5,000 each. if you were trying to buy a house then the bank would not want you to have the avilability to run out and charge up 25 to 30 grand worth of cc debt right after you buy the home to furnish it with all new stuff. they would look at that as risky, but if you only had 2 cards with 5 to 6 k, they look at that as less risk to getting in over your head

funny you should say that, i was going to add another story to my post but decided not too. my cousin went to get a car loan a few years ago. she was denied and didnt realize why, since she had a spotless credit report. the bank told her that she had 40k worth of open credit on credit cards and therefore could afford to just charge the car so she technically wasnt "in need" of the loan. she closed 2 cards and was approved within a month.

but in this day in age of not knowing where credit will be in the future id recommend keeping them open since in the next few years it may not be as easy to get credit if you truly need it. might as well keep them just in case.

 

[rippinitup7 10+ year member]

also the amount of time you owned the card has an impact on your score. for the banks/loan people, it shows you are responsible if you had a card open for 6 years and it's in good health with a low balance. if you are trying to "free yourself" of CC debt and are getting jumpy to just cut the card up, this is another option: have the credit line reduced to something you feel more comfortable with. that way the card is still open, your score stays good, and you won't have so much free credit available to go spend.

 

[blackdragonaudi 10+ year member]

The way to help your credit is to keep them open and not use them. OR if you use them pay it off a soon as the bill comes in. Darn I am such a hypocrite I have 4 cc and I haven't paid any of them off.

 

[iamamp3pimp 5,000+ posts]

Ok does anyone know I have paid off a few credit cards should I close them or will i help my credit score leaving them open with a $0 bal

leave the oldest one open, close the rest.

helps with history.

 

[iamamp3pimp 5,000+ posts]

i dont remember what its called, potential perhaps....companies that see that you have 8 10k credit cards with a 0 balance see a person that has the potential to be 80k in debt at any time.

decrease your potential, and increase your score/likelyhood of being approved for a loan.

 

[moo_awn 10+ year member]

If you are trying to raise your score, keep 2-3 lines of revolving credit open, i.e., credit cards. Make small purchases and pay them off every month. I'm trying to buy a house this year and need to work on my credit as well.

 

[John3000 10+ year member]

If it has a high interest rate, close it. I just bought my 2nd house and it was quite the pain in the *** the way the economy is. Most, if not all, lenders look at the interest rate on your cards and if its some retarded number they wont approve you for a loan unless you pay it off in full and close the account.

If you have had it for some time and the rate is low I would keep it for those random emergency situations.

 

[OneSweetRide83]

The way to help your credit is to keep them open and not use them. OR if you use them pay it off a soon as the bill comes in. Darn I am such a hypocrite I have 4 cc and I haven't paid any of them off.

x2

 

[duece212 5,000+ posts]

open credit lines != debt

If a mortgage broker or bank tells you to do something that will hurt your credit score (close good standing, aged, revolving accounts), tell them to FO and go find another broker/bank.

Closing a revolving account that has a zero balance is guaranteed to not help your fico score. If it helps a speculating broker or an underwriter doing a manual review of your credit file, go get a second opinion from a different broker/lender.

Now if that credit card has a balance on it, pay it down to where its atleast under 10% utilized and keep it open. Showing high balances on your credit cards is a big ding to your credit score. Also if you pay them off "after the bill arrives" every month they are still most likely reporting a balance. You need to pay them off before your statement cuts every month to not have them report a balance on your credit files.

 

[Immort4l Ranger 10+ year member]

my aunt is a personal banker and she said the best thing to do to help build a score up is to leave them active with a minimal balance or a balance small enough to pay off every month so you dont get Fed with interest. so you it for monthly purchases like gas and then pay it off weekly.

 

[squeak9798 5,000+ posts]

that all depends. this is what i know. the bank will look at your available credit on the cards that have 0 balance. lets say you have 5 or 6 cards with limits of 5,000 each. if you were trying to buy a house then the bank would not want you to have the avilability to run out and charge up 25 to 30 grand worth of cc debt right after you buy the home to furnish it with all new stuff. they would look at that as risky, but if you only had 2 cards with 5 to 6 k, they look at that as less risk to getting in over your head

I 1) disagree with that line of thinking, and 2) have never personally seen it used in practice. For item #2, of the two companies I've worked for and others I've worked with, none have "penalized" a customer for having open, unused tradelines. I personally would actually consider it good that a customer has access to such available credit but is capable of handling the responsibility.....well, responsibly.

For item #1, I also deal with delinquency on a daily basis. Let me give you a clue; Most people don't put themselves into bad situations with credit they had open/available at the time of the loan. It's what opened after the loan that hurt them. I could not even begin to count the number of times I've updated an application on someone who is having problems paying us (and everyone else), and have accumulated substantial amounts of debt after our loan was originated. These weren't open tradelines they decided to utilize after the loan was made. These are fresh tradelines opened after the loan. The proportion of people who got into trouble with new tradelines compared to people who got into trouble with open/available tradelines is skewed severely in the direction of the former rather than the latter.

 

[squeak9798 5,000+ posts]

As to the original question; It depends on your particular situation. No one on an internet forum of any kind can tell you in advance how it will affect your score. If it's an older tradeline or you don't have many other open revolving lines it would probably be beneficial to just leave it open. If you have 10 other open revolving lines and an already good credit utilization, it might be beneficial to close the line.

Just for an example; My credit score is pretty high. I presently only have 2 open revolving tradelines; 1 regular credit card and a Home Depot card. But my utilization is low, my pay history solid, I do have other revolving tradelines but they are presently closed, and both of the open revolving tradelines are well aged. With my credit score and my debt load, opening another revolving tradeline would likely have little value and could potentially hurt my score. I really, honest to goodness could not see my score getting any higher at present.

Although, in my not so humble opinion, present credit scoring is a farce. But that's a tale for another time.......

 

[iamamp3pimp 5,000+ posts]

i always thought it was BS how they make it difficult for you to even see your credit score, and they never quite explain how it gets to be exactly what it is.

 

[maddskillzz 10+ year member]

you need to keep your oldest accounts open and in good standing...my credit got trashed threw a divorce so upon trying to rebuild my credit i got a card that had a high interest rate and an annual fee...i kept it for a couple of years and got 3 more cards with no fee and lower interest so i thought i would cancel the one with the fee...when i canceled it my score dropped over 60 points //content.invisioncic.com/y282845/emoticons/crap.gif.7f4dd41e3e9b23fbd170a1ee6f65cecc.gif