Finance folk

[whomper]

If you close out a few Credit cards after you pay them off it hurts your credit . closing out credit cards hurts your credit. true or false ?

[Footballjoe]

I always heard it does but only for a short while.

[Furd]

True.

[bushwacked]

True, credit scores typically go up if you have credit your not using.

[muck]

True, credit scores typically go up if you have credit your not using.

 

 

...but, only to a point...and that point varies based on the credit models, and, while similar, each credit bureau and bank uses different sorts of credit scoring models...

[Furd]

Its called a debt-to-credit limit ratio. Its a hugh chunk of your FICO.

 

Closing an account reduces the amount of available credit. Unless you don't have any debt, that increases your debt to credit limit ratio, which isn't a good thing.

Edited April 19, 2012 by Furd

[montster]

Keep them open. Every few months, charge something small, and don't forget to pay it off on time. That will keep the credit issuer from closing the account.

[Avernus]

Closing a card shows you are unable to handle your current credit status and it drops you down a bit but I can't say for how long....

[Avernus]

Keep them open. Every few months, charge something small, and don't forget to pay it off on time. That will keep the credit issuer from closing the account.

 

 

This right here

[Big Country]

In addition to what the others have said, length of time the account is open is a factor in your credit score.

 

In short:

1. Keep them open. You don;t have to use them, but lessening the average open time of your credit history and reducing available credit hurts your score.

2. Having open unused cards does not affect your score.

3. As others noted, charge something trivial at least every few months to keep the account open and active.

4. Pay the balance off in full immediately. Carrying a balance hurts you (but helps the credit card companies bottom line).

5. If you are the kind of person that can't help but use a card if you have it, literally but them in a tupperware container of water and freeze them. That way, if you want/need to use them, you literally have to unfreeze your credit.

[muck]

However, if you don't need credit (i.e., you have your vehicles and mortgage), and you're not starting a business or anything else of the sort any time soon, trying to max out your credit score is less important than sleeping well (and how you do that can vary from person to person).

 

Manage your finances as intelligently as you are able ... but it's more important that you manage them in a way that makes sense for you and your family than per some formula or someone else's ideas. So, if managing credit is tough, then don't be afraid to cancel a card or two (vs. freezing them or cutting up the physical card ... neither or which makes the risk of running up a new debt actually go away).

[matt770]

Calling your card issuers and asking them to raise your limits helps your score too.

[Brentastic]

However, if you don't need credit (i.e., you have your vehicles and mortgage), and you're not starting a business or anything else of the sort any time soon, trying to max out your credit score is less important than sleeping well (and how you do that can vary from person to person).

 

Manage your finances as intelligently as you are able ... but it's more important that you manage them in a way that makes sense for you and your family than per some formula or someone else's ideas. So, if managing credit is tough, then don't be afraid to cancel a card or two (vs. freezing them or cutting up the physical card ... neither or which makes the risk of running up a new debt actually go away).

 

^ Yep.

 

I am completely debt free and have no open lines of credit and it's been that way for nearly a year now. I checked my credit last fall and I think it was around 720 which is good enough for me since I have no plans on taking on debt.