Since I paid off 3 credit cards, should I just outright cancel all 3 of them?

Question

I have 3 store credit cards that I just paid totally off this week. The only other credit card I have is a Amazon Visa. Since the Visa has a lower intrest rate than the store CC I carry.......it is the only one plan on using in the future. Should I call and cancel out the 3 of the store CC I still carry around? Would this hurt my credit rating at all. My rating has slipped because of 2 late payments, but those were on the accounts I have currently paid off. The credit limits on them are: $120.....$650........$1,000.

The one I carry has a limit of $6500. I have heard that if you call a CC company and ask them to lower you CC limit, it also hurts your rating.

Any help would be greatly appreciated. ThX!

Will it affect my rating if my report shows that they have been canceled? Right now, they show up on my credit report.

Answer 1

I have always had good credit, but together me and my husband spent 18 months cleaning up his credit from a 540 score to well over 700 (which is great btw). This was about 4-5 years ago. I only say that to let you know I know what I am talking about. For starters the actual mathematical formula used to determine your credit score is a secret. Which sucks. However, there are guidelines that are very helpful such as :
•Payment history (35%) – the most important category. Have you made all payments on time and for how long. How many unpaid debts you have that have resulted in alternative action (e.g. bankruptcy, tax liens, collection lawsuits, etc).
•Amounts owed (30%) – how many lines of credit you have and how much you owe compared with how much you can borrow.
•Length of credit history (15%) – how long you have had your accounts.
•New credit (10%) – how many new lines of credit you have.
•Types of credits used (10%) – do you have a balance of revolving (credit cards) and installment (loans) credit lines.

If I were do this is what I would do. Get rid of the store cards (close them). Closing them doesn't hurt your credit....what hurts you credit it the fact that you are lowering your overall amount of credit extended to you, and if your balances equal more than 30% of total credit available, you get a ding. But as soon as your balances fall below 30% you get a jump in your score. So KEEP your card for 6500, and keep your balance under 30%, or get it there asap. Then never use more than 30% of your total limit on the card. Personally, I would keep the card, pay it off, and never use it again ata all but keep it open. You want to keep it open because the lenghth of time of open revolving accounts(credit cards) is a plus to your credit score. I have this one credit card that I have had since college. they keep raising the limit hoping I'll go nuts. The limit is now 11 grand. My balanace is ZERO. There fore, i have 11k of credit extended to me, but a zero balance (like i said under 30% is good), and I've had this credit card for about 8 years, so that looks "responsible" on the fico score, and is a plus to your score.

It's tricky to get used to how it all works, but I spent the time doing it and we went from BARELY being able to buy a house 4 years ago and filling out mountains of paperwork, to have great credit and filling out a one page document, and handing over a down payment to buy our second house.

Anyway, store credit cards are trash! They ALWAYS have high interest rates, and they are only good for the stores they are listed for. You aren't going to be having any clothing emergencies, and if your closet burned down (literally), and you did have a clothing emergency then you could reasonably use your visa.

Having said all this, can I make a suggestion?

Total Money Makeover by Dave Ramsey. Go to the bookstore and buy it. You will thank yourself.


***********OH YEAH! Don't ask to have you credit limit lowered on the visa (like some others have said on here)! That in itself won't lower your credit rating, but you will have less credit to use to stay under the 30%, and anytime you go over 30% that DOES give you a ding! Remember, credit limit hikes are good for you IF you stay under 30% and don't lose your mind and go nuts a Macy's!

Answer 2

I think you should cancel them since you paid them off and especially if you don't plan on using them in the future!
It has been recently said that having an open credit card looks good on your report rather than paying off cards and closing the accounts. Companies like to see not only past credit history but recent credit transactions/payments as well. Closing those store card accounts won't hurt your credit score! Those late payments did however so just get rid of the cards that get you in trouble!
I think you are on the right track b/c you already intend to keep your Visa open and that is good enough to keep you having credit history! Plus the intrest is lower so it's the best card for you to keep!
One extra tip= Make sure you don't go past the halfway charging limit on any card b/c that may make your score decrease. And if you are past half then just try to get it down to that point before using it again!
I think you are very informed and are on the right track to fixing your credit dilema! Good Luck!

Answer 3

Treva A has the best answer, but she still messes up! At lease she did her research, unlike most of the others here.

Start by visiting http://www.myfico.com

This is the home site for the folks who developed the FICO scoring system, and they have lots of educational info on it explaining how your credit score works.

Treva A states that 15% of your credit score is based on your credit history, but then she says to cancel your cards?!?! Wrong answer!

When you delete those cards you clear out a portion of your credit history, which is a major portion of your score.

And while it's true store credit cards are not as good as Visa/Master cards on your score, it's STILL a credit history!

The only reason I would recommend canceling them is if you feel you can't control your spending and would rather get them out of your reach. If that's the case, and you must cancel them, do this:

DO NOT cancel them if you are planning to get a loan in the near future. Canceling them WILL lower your score, but after a few months your score will restore itself a bit.

Cancel 1 card every 2-3 months. This will lessen the impact.

Be sure that you check your credit reports afterward and make sure it states that the account was closed at your request, and not closed by the credit lender. That is actually a negative item on your report.

Answer 4

Believe it or not, the credit bureaus will give you a negative rating if you just close them. I would keep them open and once in a while buy something on credit pay the amount. If you leave a little on the account it is better. If you want more info on you credit card and credit a good program would be Coming Back Strong Financially you can order it on the web at their website. I have the programs and have learned alot and have an excellent credit rating because I did what they said. The website is the same as the name.

Answer 5

If you are not going to use the cards, I would cancel them. If you call the CC company and ask to lower your credit limit, it does NOT hurt your rating. Those 2 late payments have affected your rating, but they only stay on for 7 years.

Congratulations on paying off your cards! You should be very proud of yourself!

Answer 6

Well you don't gave to cancel all of them mabe just two of them and keep one but use it wisely!!! Try not to let yourself get into that type of situation again! Yea credit cards a great but can be a pain in the you know what!!! A good idea you could use is to put a sticky note on the back of your credit card and mabe a limit you don't want to go over! Then everytime you use the card just subtract what the amount spent. Good luck!!!

Answer 7

I wouldn't cancel them immediately particularly if you have had them for more than a year. Credit scores are also calculated based on the length of the credit. Before you do anything, check your credit scores and keep the ones that you have had for the longest. Store cards usually become inactivated (not canceled) if you don't use it for certain period time. Call them and find out.

Answer 8

I've been told that if you leave them open but carry a zero balance this show's people that look at your credit that you have been granted high limits in the past and are able to control your spending to keep them paid off...this I believe carrys alot of weight

Answer 9

Yes it will affect the credit rating to close these accounts. While you are not using them they have an available credit limit wich adds to your limit - debt ratio.

Here is some additional info. Hope this helps.

Answer 10

You are on the right track and should cancel the 3