I got a loan to pay off all my debt and am not planning on using any of the cards ever again. Which looks worse on my credit: keeping the cards open but not using them, or closing them out completely?
2007-01-06 14:18:33 · 16 answers · asked by skylaraislinn 2 in Business & Finance ➔ Credit
I have 6 credit cards, 1 with an annual fee. I will try to negotiate out of the fee and keep it open. But the longest card I've had is a Capital One card. Should I keep the one with the longest history open even though its Capital One?
2007-01-07 09:11:53 · update #1
It is recommended not to close unused credit cards, especially the ones with longer credit histories... Longer credit histories demonstate a lower risk of default than those with shorter credit histories. Check out the source listed below...
2007-01-06 20:25:24 · answer #1 · answered by Krazee 3 · 0⤊ 0⤋
If you are paying off balances on multiple cards then you should absolutely close most of them out. This will show a future lender that you are not exposed to credit theft and high credit bills in the future. Creditors use the amount of credit at your disposal as a measuring stick before approving for a new loan. Keep one or two cards open, but keep them open with low limits. Say 5 thousand and 10 thousand each.
2007-01-06 14:41:35 · answer #2 · answered by brandorules 2 · 0⤊ 0⤋
I read somewhere that in the short term it is best to leave it open. However, if you plan on using the cards then I would keep one of them. I met a guy not long ago who had an excellent credit rating and didn't have a single credit card. He told me that he never had a credit card and had no plans to do so. He owned real estate and only financed cars. You don't need a credit card to build credit. All you need to build your credit rating is a car, mortgage or other type of loan where you make regular monthly payments. More people get into financial trouble with credit cards than any other thing.
2007-01-06 14:27:02 · answer #3 · answered by Flyby 6 · 0⤊ 0⤋
Keep it open but just lower your spending limit just in-case your card is lost or stolen. When you go to buy a car or a house the bank wants to see a history of your credit. Having a credit card is the best way to show a good rating. Most banks won't give you a loan without a credit history. I would try and use them once a month and pay it off before the month is over to save on interest.
2007-01-06 14:22:32 · answer #4 · answered by Girls M 4 · 0⤊ 0⤋
Definitely keep it open - as others have said it hurts your credit score to close a card. It is best to actually use it responsibly and pay it off at the end of the month. Check with the card company to see what kind of rewards/points you can earn by using the card. Also, by using the card you are actually delaying payment allowing yourself to keep your money in your own accounts a little longer - and perhaps even earning a little interest.
2016-03-28 23:51:19 · answer #5 · answered by Annette 4 · 0⤊ 0⤋
In terms of a credit report, there is nothing bad about closing out a credit account. (Keeping them open does allow you to draw on the credit if you need it.)
On the other hand, if you keep them open with a zero balance, when you go for a future loan, they may be a concern as a possible debt load.
For example, if I have 4 credit cards, each with a $10,000 limit, then another lend knows that even though the balance is $0 today, it could go up to 4 * $10,000 = $40,000 if I do a lot of charging.
2007-01-06 14:24:53 · answer #6 · answered by Bryan J 4 · 0⤊ 0⤋
Do not close a card that has a long history...this could cause a huge drop in your credit score! Pay it off, but don't charge on it!
You can close out the recent cards...but I'd try to keep at least two longer history cards open...to utilize your credit score and get the best possible score you have to have at least one to two credit cards reporting...and a card with some hisory is great for your score...so be catious of closing those older cards!
2007-01-07 11:04:13 · answer #7 · answered by Anonymous · 0⤊ 0⤋
My advice, based on my experience, is to keep at least one or two open but not use them so that you will have a searchable, verifiable credit history should you ever need to borrow again (car loan, etc.) . Also, you need a major credit card for renting things like cars. You might consider closing most of them though because, If you have too many open, the credit agencies hold it against you (i.e. you have the potential to go out and max the cards our tomorrow). But you know your spending habits, if it will be too tempting to run up big bills if you keep them open, it might be safer to close the accounts (or freeze the cards into a big block of ice in your freezer ;-)
2007-01-06 14:31:09 · answer #8 · answered by desertkoigal 1 · 0⤊ 0⤋
Closing out a credit card account or not using your credit card, which has zero balance both keep your credit score the same. The only benefit of having the credit card is that it makes it easier for financial institutions to offer you credit in future, when you need it. For someone to have given you a credit card, it shows that they considered you credit worthy and they could make a lot of cash from you.
2007-01-06 14:27:04 · answer #9 · answered by Muga Wa Kabbz 5 · 0⤊ 0⤋
Keep them open.. unless they are Capital One. It will show you have available credit and are not using it.. Looks good on the report and your score. Capital One does not report a Credit Limit, so they aren't much good for keeping. See if they will drop the annual fee , telling them if they don't you will close the account. I'm going through this now, trying to raise my credit score.. so that's why it's fresh on my mind.
2007-01-06 14:25:37 · answer #10 · answered by goodolelady 2 · 0⤊ 0⤋