Question about closing credit cards out...?

Question

I have recieve mixxed opinions on this from people. I have 4 credit cards currently. 2 of them have balance transfer cards which I am not accuring interest on. 1 of them is a card that I keep a low balance ,on but dont want to close out because it is an airline miles card. The 4th card is a card where interst just kicked in on ( originally a zero interst transer card). The balance is about 2k and I have the abilitiy to just pay that card off this month.

My question is --should I close the account out when I eliminate the balance, or does that hurt your credit?

Answer 1

You should read this article:
http://bankrate.com/brm/news/cc/20061114_cancel_card_credit_scorea.asp

Answer 2

Do not close the accounts. Pay off the balances and just keep them open. If you want charge a low amount and pay off right away. One of the factors people look @ when issuing a loan/financing an item/giving a new credit card is how much debt to credit you own. They look at how much you worth compared to how much you are liable. You are building positive credit history.

I have 3 credit cards to my name. 2 of theare opened to have more credit on my name, but I rarely make charges to them. I only make a charge so that it appears on my credit statement and I pay off immediately once I recieve the bill. 2 of the 3 credit cards that I did that to, just recently increased my spending limit. I do not plan to use that much money; however I do need the higher spending limit so that it can be reported.

There are a lot of factors that go into your credit report/history/present/future/ and you should look @ that article the above user posted. Explains more in debt. Good Luck.

Answer 3

Keep in mind - Your credit score is calculated on a variety of factors including, but not limited to your total credit line - If you have 3 cards with 5,000$ balance, you have 15,000$ in credit. It is calculated based on your credit load - how much of that credit are you currently using? Do you currently owe 5,000$ of that 15,000$ line? Or do you owe 11,000$ of that total line? Owing 5,000$ looks better than 11,000$ because it looks like you're out of control in spending and can't afford to pay it all back when you have a 15,000$ credit line.

A larger line of credit is more important than how many cards you have. Can you close one of those cards and increase your credit limit to 10,000$ on one card? You maintain your total credit line.

And lastly, your payment history is importaint too. Always pay on time and double up payments on loans, and never agree to alone with a pre-payment penalty.

Actually, my answer is better explained by the link Cruiser 68 posted. Go read it. I read it out of curiousity and it outlines other factors and such to calculate your credit score and the how's and the why's of it.

Answer 4

If you close out any card, it should be the one you've had the shortest period of time. Keep open the card you've had the longest - even if you don't use it. Part of your credit score is a long-term relationship with one creditor - if you open accounts, use them, and close them quickly, they start to wonder about you.

Answer 5

Closing out accounts actually helps your credit score. Even if you have a zero balance on an account, creditors look at that as an open-ended account with the possibiilty of racking up a balance and overextending yourself.

Answer 6

I had a mastercard and a zellers card 6 years ago I cut them up and paid them off then cancelled them.2 years later i called up they same company to get another card and they said no even though when i had one i never missed a payment.I said screw it and i still don't have any today,I think it's funny when they now call me up telling me i can have a card,no thanks.

Answer 7

Close it. The open account limit counts against your total credit score.