Closing A Credit Card?

Question

If you want to close a credit card will it affect your credit (will your credit score be low) b/c a want to close a Best Buy Credit Card and i dont want anything from them anymore i have other credit cards and they have not been any trouble at all and Best Buy is just weird when i first applied for the credit card it two about 3 weeks to come in the mail but they also sent me a Master Card from HSBC Bank for $300.00 witha yearly rate of $69.00 that's crazy i did not apply for that credit card and they still sent it.

Answer 1

In this case there is no effect at all. Once you have established credit, there is some value to holding the same card for a long time, but really as your credit gets stronger you will get better deals from other cards. It would be a good idea to try to stick with one for the long haul; as better deals arise, call them and tell them you want better terms. They'll know when you're serious by your credit ratings.
As long as your credit is clean you can push them around a bit. Make sure to destroy all records you put in the trash so they cannot be copied. I shred every credit card offer I get as a precaution.

Answer 2

Ellie is correct. Check out the link she supplied.

Two major factors in figureing your credit score involve credit history and debt/credit ratio. That is the differance between how much you owe and how much credit you have.

Whenever you cancel a card, you are removing a portion of your history. Potential creditors want to see if you have any "credit experience" and want to see how good of a risk you are. They will deny you credit if you don't have a history of using credit.

As for the ratio...lets say you have 5 cards with a total credit limit of $20,000. You have a debt of only $2000, so your debt/credit ratio is 10%.

Now lets cancel a card with $5000 credit limit. You now have $15,000 in credit, but you still have the same $2000 in debt. Your new debt/credit ratio is 13%. Still OK but you increased it. Anything over 25% starts to effect your credit score.

Here is my suggestion. Call HSBC about the Master Card and tell them to either remove the yearly annual fee, or cancel the card. It's plan silly to pay annual fees when you don't use the card. If they won't remove the fee, cancel the card.

Keep the Best Buy card. Make sure that it has a very low credit limit so you are not tempted to over use it.

Doing these two things will cause a short term drop in your credit score, but it will improve after a few months (assuming you continue to behave with your other credit).

Just note that it is recommended that people have between 3-5 lines of credit. If you already have that many, then cancel the cards.

Answer 3

Legally you cannot receive a credit card without applying for one. You probably did however when you thought you were just getting Best Buy credit.

You can all them up and tell them you want to cancel your account, as long as there is no outstanding balance, but this will LIKELY affect your credit score negatively. The reasoning behind this is that when you close a credit card you reduce the available credit you have thereby increasing the debt/credit ratio.

I've provided further reading for you.

Even still, it's worth dropping a few points to get rid of any unnecessary fees associated with owning the card.

Answer 4

First, you probably did request the card somewhere in the fine print of the paperwork for the Best Buy card.
Closing established accounts can decrease your score by changing your debt/available credit ratio.
Closing a new account that has never been used will not have a significant impact on your score. Your debt/available credit ratio should be about what is was before the card was issued.
Your score won't be exactly what is was before. These days blinking seems to change your score.

Answer 5

From my expierence when I paid a credit card off my score went up. But after a I cancelled it about two months later the score went down. When I asked why I was told because my ratio of credit to balance had changed.
I had a total of $5000 credit limit and a balance of $2500. When I canceled my card which had a limit of $2000 my ratio went from 5:2.5 to 3:2 (credit limit 3000 balance 2000).
I was also told this is just one factor of many that make up your score. I have yet to find a standard formula these credit companies use to determine scores. It's like a big trade secret of something.

Answer 6

Don't listen to the previous poster. It absolutely does affect your credit score when you close an account because it affects your debt to credit ratio. The longer you have had a card the more it will affect your score.

Go to http://www.myfico.com They have a credit calculator that actually shows you how much your credit score will raise or lower if you close an account, are late on a payment, pay down your debt, etc. It's a really great site. There are also some great articles on http://www.moneycentral.msn.com on improving your credit score and sneaky ways that your credit score can be lowered.

Sorry Dishmal I didn't mean you!! :-)

Answer 7

Contact the credit card vendor. Tell them you are not interested in the card any longer. Pay the balance and you would be just fine. That will stay in your record for about 7 years. As far as the Master Card, call them directly and tell them you never gave authorization to receive that card and they should be able to cancel and not affect your credit.

Answer 8

Simply cut up the cards and mail them back to the bank. Write a signed note that telling them that you are terminating the line with immediate effect and you'll not be obliged to pay the annual fee or taking up other credit obligations.

Answer 9

remaining money owed does impact your score-sturdy or undesirable no you could actually inform you that. i won't have the ability to respond to truthfully nor can maximum persons considering we don't artwork for FICO and FICO does not enable loose their precise formulation to the first public, yet i be attentive to that remaining money owed will impact your score. sturdy or undesirable, back who is familiar with. likely adversely if the money owed are older. while you're making plans to purchase i'd seek for suggestion from a loan broking provider or your monetary business enterprise to make certain what they think of is the main suitable ingredient to do, yet remember they might't be attentive to for constructive what's going to happen the two, yet they might provide you evaluations. you're saying you have no balances on any taking part in cards and appropriate score, why are you uninterested in looking after them-what's to shelter if there is not any stability? in case you sense you will desire to close money owed, i'd propose remaining the latest money owed, considering that isn't impact your length of historic past. length of time is extra significant than how many money owed. as long as you have a sturdy mix of credit money owed, ie credit, can charge, installment loans and revolving money owed your historic past would nevertheless be stellar with an 820 score. different suggestion would be merely positioned them in a lock container till once you purchase your place after which you would be able to close them without it mattering a lot. maximum suitable of success!

Answer 10

Closing your account will effect you depending on your circumstances. If it is your only revolving card, closing it is a bad idea and WILL lower your score. If you have a bunch of other revolving accounts, then closing it is a good idea and will INCREASE your score.

Edit: Retail stores like Best Buy dont' actually give you the card, they use a bank that gives you a card and has Best Buy's name on it. The card you received probably is specific to Best Buy and isn't a full blown mastercard, but is backed by them (much like visa backs most every banks 'check card').

Edit2: the next poster isn't meaning to say ignore my post, but the people before me =P