should I close my credit card, once I paid it off, say I pay off my no annual fee credit card should I close it out or leave it active and just not use it? I heard that if you close a credit card that you pay off it can bring down your credit rating
2007-02-11 09:43:54 · 9 answers · asked by Anonymous in Business & Finance ➔ Credit
Yes, your score will most likely go down if you close some of your credit cards. Your FICO score is based on the following things:
* 35%, punctuality of payment in the past
* 30%, the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
* 15%, length of credit history
* 10%, types of credit used (installment, revolving, consumer finance)
* 10%, recent search for credit and/or amount of credit obtained recently
By closing your account, you're making your ratio of debt to to credit limits worse.
For example, if I had three cards with a $1,000 credit limit each, my total credit is $3,000. Let's say I have a balance of $500 on each. That's 50% usage. Now, if I paid off one of them, it would be $1,000/$3,000 or 33% usage. If I closed the card that was paid off, it would still be $1000 charged but it would be out of $2000 limit, so it's back to 50% usage. The work I did to pay off the third card was wasted by me closing the account.
Secondly, closing accounts reduces the average length of your credit.
I'd be very careful about which cards to close with that in mind. Of course, if you have like 15 cards, you might want to close a few, but really weigh your options.
2007-02-11 13:57:54 · answer #1 · answered by calliope320 4 · 2⤊ 0⤋
it is a good idea if you pay off the balance and close the card right away. If you don't, then you will be costing yourself more money in the long run when your credit score isn't up to par."
f you have a credit card, you have a credit history. So, the first thing you should do is obtain a copy of your credit report, review it for inaccuracies, correct any problems and then slowly close unused accounts -- trying to close one per month.
Not having a lot of credit cards decreases your worry of late fees. It is easier to remember your payment dates. "Someone with 15 or more cards probably has a difficult time remembering when all of them are due
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2007-02-11 17:57:44 · answer #2 · answered by grierGRIER h 3 · 0⤊ 0⤋
Not if it's your only card. If you have more than a few cards, it's good to close one out. Your credit rating is based in part on your debt ratio, one factor being the amount of available credit you have. The more credit available, the lower your score; high available credit makes you a credit risk.
2007-02-11 09:52:13 · answer #3 · answered by Anonymous · 0⤊ 0⤋
No. I wouldnt close it. Just try not to use it or use it as little as possible. Credit cards are an evil yes but a necessary evil. Handy if you ever want to rent a car too. Cant without one.
2007-02-11 10:50:48 · answer #4 · answered by Smarty Pants™ 7 · 0⤊ 0⤋
Closing it will reduce your available credit and thus lower your credit score. Keeping it and not using it will maintain the available credit.
2007-02-11 09:51:11 · answer #5 · answered by Scott C 2 · 0⤊ 0⤋
You should keep it for emergencies, it can lower your credit rating by having little to no credit
2007-02-11 09:50:11 · answer #6 · answered by desiree c 3 · 0⤊ 0⤋
Suzi Orman would say to keep it. She is a pretty smart cookie and I follow her.
2007-02-11 09:51:59 · answer #7 · answered by Mikki 3 · 0⤊ 0⤋
lower the limit and keep for a rainy day
2007-02-11 10:51:38 · answer #8 · answered by x69bw21 2 · 0⤊ 0⤋
no, keep it and forget about it. Put the card away and don't use it.
2007-02-11 11:25:25 · answer #9 · answered by Anonymous · 0⤊ 0⤋