I'm working on downsizing my debt, and I've done well in my opinion over the last 8 months or so. Several of my credit cards (I know I shouldn't even have this many open) have zero balances. I'm not worried about the temptation of using them because I've been good with that. I know this is a subject of controversy, but should I close some just to simplify things, or leave them open for credit history? My fiance and I will not be buying a house for at least 4 more years (when we're both done with grad school and can figure out where we'll be looking for long-term jobs). No other big purchases, i.e. car, as we did that last fall. Here's the deal with my credit cards:
Retail Store Cards
$500 limit, opened July 2003
$850 limit, opened May 2003
$1000 limit, opened April 2003
$200 limit, opened July 2001
$400 limit, opened December 2001
General Credit Cards
$1500 limit, opened March 2004,
-->10.99% interest rate after promotional 0% ends July 2007
$2000 limit, opened May 2006
2006-10-31 09:21:26 · 9 answers · asked by Anonymous in Business & Finance ➔ Credit
I used to think that keeping old cards open was a plus for credit score. However I was told by the loan department of Sovereign Bank that when they evaluate a loan applicant they add up the total amount of credit available on all open credit cards and count that as debt. Then when they take the ratio of assets to debts you lose big-time for having those unused credit cards open. They said they don't care whether you are currently using any of that card's debt potential - just the fact that it exists is a red flag that they use to deny loans.
The cards you cancel still stay on your credit report for years so creditors will be able to look and see that you had credit. But having them marked as "canceled at customer's request" is the best thing they can say.
2006-10-31 09:30:41 · answer #1 · answered by Rich Z 7 · 0⤊ 1⤋
Please dont close any of your cards! These limits are low and each account is over 2 yrs old, it would hit your FICO scores badly if you decided to close them. The card with the 2000 limit should remain open as well, even if you just opened it. In 4 yrs when you want to buy a house, it would be over 4 yrs old.
What you neglected to tell us was what are the current debts on the cards? If your total debt is below 30% of your combined credit, your fine, but if you can get them lower that would be great too. Can you pay them off all (if not how many months will this take for you to do?) If you can keep most of the cards at a zero or a balance that is no more than 10% of the credit limit, your fine. In fact having a little debt is beneficial to your FICO scores.
You dont have much of a problem here, unless your tempted to rack up charges on these accounts (if so, cut up the cards and leave the accounts open)
check out Creditboards.com. This site has a wealth of information about credit
2006-10-31 09:36:04 · answer #2 · answered by sevensisters808 1 · 0⤊ 0⤋
Keep your oldest card since part of your score is the average age length of your credit. Just watch what you spend on your older accounts since another part of your score is how much of your available credit you are using. For example, spending $200 a month on your $200 card will have a more negative mark than spending $200 on your $2000 limit. In one case, you are using 100% of your credit, on the other card, you are only using 10% (which is really good).
2006-10-31 12:38:18 · answer #3 · answered by Mariposa 7 · 0⤊ 0⤋
I've heard you can be penalized by having credit cards with too low limits. I've also heard you should have no more than 2-3 cards max, and having more will hurt your credit.
I would get rid of all but one retail card, and keep the general credit cards. And, don't open any more accounts if possible.
Congrats on the downsizing!
2006-10-31 09:32:32 · answer #4 · answered by lulu 2 · 0⤊ 0⤋
You can close some of them. The problem with having too much available credit is that it can affect your debt-to-earnings ratio. Should you decide to, for example, buy a house, the lenders look at how much credit you can access at any given time. I think I would reduce the number of retail store credit cards in favor of keeping the general credit cards. Most of those department store cards take visa/mastercard and discover.
2006-10-31 09:25:38 · answer #5 · answered by Anonymous · 1⤊ 1⤋
If you close a credit card account, your score drops significantly. Just pay the off and leave them at a zero balance.
2006-10-31 09:51:22 · answer #6 · answered by serialmom12 5 · 0⤊ 0⤋
If you want to close any, close your most recent cards only. Definitely DO NOT close the two 2001 cards-- those are your longest history cards.
7 cards total is not detrimental to your score.
2006-10-31 09:27:07 · answer #7 · answered by Anonymous · 0⤊ 0⤋
leave them open for credit reasons. Use them once in awhile for small balances then pay off immediately.
2006-10-31 09:23:37 · answer #8 · answered by marlenekay4 6 · 0⤊ 0⤋
close the one that you pay the highest rate on
2006-10-31 09:28:55 · answer #9 · answered by buzz kill 3 · 0⤊ 0⤋