Credit card question....

I know that some people say its good to close out your accounts after the balance is paid off and some say to keep them open. Does anyone know (from the perspective of people obtaining your credit rating/score, etc.) which is better?

I just paid off a few cards and want to close them out. But I am just not sure how that looks on a credit report.

TIA

Re: Credit card question....

actually i have heard that it does look not sooo good.

not sure if it is true or not

Re: Credit card question....

One of them is a card that charges an annual rate of $29, and I am not paying that to have a 0 balance, I think its insane. I called the company (Capital One.. btw they SUCK!) and said I wanted to close it, thinking they were going to say they would waive it, but they didn't, so I closed it. There is no reason to keep a card open if I am still going to have to pay an annual fee. As for the other cards, none of them have annual fees so maybe I will just keep them open. I only have a few, but I just didn't want too many open accounts. I did read on another website that if the bills are paid up to date, and there are no late fees, you can have a few open and it wouldnt look bad, especially if you have had them for a long time. (I've had the Capital One for a long time, and now I wanna kick myself in the a$$ for wasting 29 a year!

Re: Credit card question....

It is not good to close cards - unless you have a ton of them - then you can get rid of some of the ones like Macy's etc. They tell you to keep the ones with the highest credit limits that you have had the longest - they look to the length of time you had the credit as well as the amount of credit vs amount of debt you have. It is good to have a few cards with high limits that you keep very low balances and pay in full if you can rather than closing cards. DH found this out after he closed a bunch of he long time cards when he paid them off he thought it was a good thing then learned otherwise later. I have excellent credit - but I keep only about 3 cards with high limits I pay them in full every month. If I can't pay for it by the end of the month I simply learned not to buy it.

Re: Credit card question....

Keep open the ones you have had the longest with the highest limits. But when you are canceling cards, make sure you have them note that it was closed at your request. Otherwise it just says "canceled" on your credit report and it looks like the cc company may have canceled it on you.

Re: Credit card question....

I think it was Suze Orman that said you shouldn't close credit card accounts because it lowers your credit to debit ratio.

ie. if you have 5 cards that will loan you 5K each; then you have a potential of getting 25K.

if you have 2 cards that will loan you 5K each, then you have potential of getting 10K.

So if you have a balance of say 1K on your cards; you have a better debt to credit ratio of 1/25 instead of 1/10.


As for the cc with the fee, even with the above info I'd cancel it, but i'd cancel only the ones that have fees.

Re: Credit card question....

As long as you're not paying an annual fee, leave them open. This is what I was told when I went to Lending training.

Re: Credit card question....

Re: Credit card question....

If your paying an annual fee, I would close it. Other than that you should leave all cards that are paid off with 0 balance open. It looks better on your credit report.

Re: Credit card question....

ultimately you want your credit to debt ratio (or is it income to debt) to look good.

If you have high debt (lots of credit cards with payments, mortgage, car paymt) and low income, your ratio is high.

You want to show that you can afford to take on more payments, etc.

If you are not using them, then close them. If you show good payment history, that still shows up if the account was closed in good standing, and you can always request a letter from that company stating your status.