SHOULD ONE CLOSE CREDIT CARDS ONE DOES NOT USE ANYMORE?
We get conflicting advice in this area. Some experts suggest that one should keep credit cards that one does not use anymore so that the ratio of credit usage to credit available looks favourable to lenders. Other experts are of the opinion that such credit cards be closed so the potential lender is not scared away because of all this "potential debt". Any thaughts?
Answers
4085 points
EthanR answered one year ago …
You can do the following. Decrease the available limit of the credit card, but do not cancel it, and cut up your credit card. The main reason to not cancel the card is because it helps your FICO credit score to have a credit card of long standing duration.
Read more from EthanR
904 points
jillybeansisme answered one year ago …
I disagree with EthanR to an extent. Decreasing the available limit also decreases the effectivenesss of his debt to available credit ratio, which is also important for the FICO score (and duration of long standing counts too). What people need to do is find a happy medium. Get rid of the department store type cards that charge outrageous sums of interest. Then get rid of credit cards that have high interest rates. The Visa/MC/Discover type cards really should be condensed and if you have more than 3, close some but not all. Keep your outstanding debt low.
Read more from jillybeansisme
951 points
Grudun answered one year ago …
Any card you have had for at least 5 years with a good payment history you should strongly consider keeping because if you close your older accounts it can shorten you credit history significantly reducing your credit score. I agree with Jillybean that you should close some of your store-only cards if you have any that you are not activly using for a significant benefit. If you have a lot of regular(Visa/Discover/MC) cards you should consider closing any with a bad payment history to keep the black marks on those cards from following you around longer that the normal seven years(they don't effect your score after that point but they are visible on you credit report). It is a balancing act between keeping enough of an active credit history and not having $150,000 in available credit that you could spend over a weekend.
Read more from Grudun4085 points
EthanR answered one year ago …
Jilly, if his debt is zero because he is not using the card anymore, then his debt ratio will be the same, whether the card has a credit limit of $500, $1000, $5000, or $10,000. That was my thought when I answered the question. Otherwise, if he continues to use the card, you are correct.
Read more from EthanR
127 points
Wantitbad answered one year ago …
I applied for a refi a few months ago and one of the mortgage guys recommended that I take a look at the advice supplied by www.myfico.com they had a pamphlet called "Understanding your credit score" that was free and very informative. It may be where your answer lies.
Read more from Wantitbad
