Just some background info: I've never had any problems with the card and have always been on good terms with them in terms of my monthly payments. Now my card is expiring and they have sent me a new card to activate but I'm thinking about not activating it so that I may get a better card with a much higher credit line and better incentives. So technically I'm not even canceling...I'm just not renewing (I guess?). Will this effect my credit at all? Thanks for your help.
2006-07-23 04:39:47 · 6 answers · asked by Majickegotrip 2 in Business & Finance ➔ Credit
There are two major factors related to your credit score. Credit history and debt/credit ratio. Another item that factors in is the amount of available credit.
When you cancel your card, you will lose that credit history, and you will drop a portion of your credit score. It will eventually restore itself after several months. So if you are planning any major purchases (or in your case plan to apply for better credit) then the last thing you want is your credit score to drop! So leave it alone!
It is generally recommended that you have 2-3 credit cards anyway. Just keep the old one for occasional purchases or emergencies.
I found this out when trying to use my Visa card recently....for some reason the store kept rejecting it. Probably couldn't read the magnetic strip on the back, and this store didn't allow their employees to manually key it in. Good thing I had a back-up MasterCard.
2006-07-23 17:30:59 · answer #1 · answered by Anonymous · 2⤊ 0⤋
Suze Orman says that it can if you aren't careful. If I understood correctly, she said that part of the way your Fico score is calculated is by length of credit and the quality of that credit. So, if you have had one particular credit card since you were 19 (I have and am hesitate to cancel it) and have had a great track record with them you could suffer. The reason is, that good credit that you have had for so long will be gone, therefore not factored in with the score anymore. Apparently, once you cancel a card, it is as though you never had it, unless you have a large balance to pay. (I also have a feeling that blemishes would stick too.)
Hope this helps. Suze Orman's website may have more accurate info on this.
2006-07-23 04:45:50 · answer #2 · answered by SuzHall73 2 · 0⤊ 0⤋
Cancelling a credit card can have a negative impact on your credit. It would depend on the card limit and the amount of open credit you have on other cards/loans.
Even if you never use the card, just keep it, or use it once every three months for something small and then pay it off when the bill comes.
You know, you can have more than one credit card, provided you have good credit, a used credit/ available credit ratio and sufficient income... I make about 100k/yr and I have about 15 cards with a combined limit of about 200k,and they keep sending me applications and approving them.
2006-07-23 04:42:32 · answer #3 · answered by ceprn 6 · 0⤊ 0⤋
If you want to "cancel" the card, do so. If you just hold it and not activate, your account will remain open.
Even though you may not use it, the amount of available credit remains on your credit reports.
This may not affect obtaining another card, but it may affect the limit. They always consider how much credit you have available to you, in relation to income.
2006-07-23 04:50:57 · answer #4 · answered by ed 7 · 0⤊ 0⤋
The best way actually is to keep your credit card, don't activate it. You wanna keep it on your credit score as unused credit - this type of loans is the best way to IMPROVE your credit. You'll be scoring good points for any loan you have available to you, but not using it. MoneyMagazine gives great advises about this, you can propably find this on their website.
2006-07-23 05:05:20 · answer #5 · answered by aaja 3 · 0⤊ 0⤋
You owe them nothing, then that's it. You end your rship with them and go elsewhere for a better deal. Period.
2006-07-23 04:47:03 · answer #6 · answered by robert43041 7 · 0⤊ 0⤋