Should I close a credit card if it's my oldest account?

Question

This is the oldest standing account that I have, but the interest rate and limit are the highest of any of my credit cards and I don't have the best history with it (since I've had it since my early 20s..). I'm going to pay the balance off this month, and I'd like to get rid of the card if I'm not going to use it, but will that destroy my credit rating? I've already spent a lot of time digging my way out of the credit score basement, and I don't want that work to go to waste. I now have a mortgage, car loan, have paid off student loans, etc. so will that offset any damage?

Answer 1

Since it's your oldest standing acct, you should definitely keep it. It has the most history on your payment habits, which as you said are not that great, however, paying it off and also having held on to it that long, speaks volumes in your favor.
Another thing to consider, is how the lender will look at that account. Even though you say it's not the best record, if they allowed you to keep it open that long, then you must not have done anything horribly wrong. If you close it, it will definitely diminish your credit score, so leave it open.
What I would do, is call the card company after you pay it off. Tell them you have an offer for another card with a much lower interest rate (whether you do or not isn't the point). Explain that since you've been a customer of theirs for many years, you'd like to keep the card, but with the current interest rate, you won't. Ask that they lower your interest rate to something more in line with 14.9% or better. If they refuse, then ask them why and how long it will be before you can expect them to approve a lower interest rate. If they are a reputable company, then they will have the answers to all of these questions and they won't hesitate to tell you something specific. (I've done this many times with mine and have not always gotten the answer I wanted at first, but in the end, I got the results, after following their guidelines).
As far as new credit offsetting the damage, I'm not sure if you mean past damage or that caused by closing the account. Any new positive credit will help to change your credit profile (strengthen the positive aspects), but it will not "fix" the negative from the past in a lender's eyes. Only paying past collections and obligations and TIME, will accomplish that.
But new credit history will never take the place of old history. A lender can look at that history and say: "This guy was in a horrible situation, but look, he completely turned it around". Whereas, you close that account and they say: "Look, he had this account for so long and then suddenly closed it. Something is going on, we need to find out." Then it's up to you to provide a good reason why you closed it, and financial institutions are funny animals when it comes to why. They may not see things the way you do.

Bottom line, keep the account open. Use it wisely, and only when you need it. Pay it off every month without fail. Doing this will keep your history intact but the interest rate won't even come into play. But in case of an emergency, you still have that much credit line if you need it. Another thing is, don't let it sit totally dormant for too long. Something that you would normally pay cash for, charge it every now and then, and immediately send the cash to the credit card company for payment. Don't wait for the bill. That is another way to improve your credit score without incurring interest.

Also, if you have multiple cards, cancel the newest ones or the ones with the lowest limits. Anything over 2-3 cards reflects negatively on your credit rating. This will also help you get the other interest rate lowered (and faster).

Answer 2

Do not close that account! Papache is dead wrong.

Two of the factors that help your credit score are having a low credit balance to available credit ratio, and length of credit history.

By closing the account, you will hurt your credit ratio and your length of credit history, and will actually be harming your FICO score.

The only exception would be if this card charges you an annual fee, then I would close it.

Just do what I do, if you no longer want to use the card, leave the account open but destroy the card or throw it in a drawer somewhere. I have several unused cards, and my credit score is usually in the neighborhood of 800.

Are all or most of your cards now paid off? If so, you can start playing games with them. I've got two cards that gave me 0% cash, one for a year, and one for 6 months. I took that cash and put it in an online savings account earning 5.35%. I use their money to make the minimum monthly payments (I have them make the payment automatically from my checking account), and use the rest to earn interest. Right now I'm making almost $200 a month in interest, on their money!!!!

Update: Correction. My FICO score was 801 prior to taking out the 0% loans. Due to my credit ratio being impacted, it's now 751. The credit balance will effect your credit score.

Answer 3

You should pay it off and leave it open if there is no annual fee. Part of your credit score comes from having a credit history. It also increases your available credit versus what you are using and that looks even better.
If you decide to close it, write a letter to the company and request they close your account and report it as "closed by consumer".

Answer 4

Whether you close it or not it is on your credit report. Make small charges and pay them off. this will continue to build credit. You can even ask them to lower the limit to prevent unecessary spending.

Answer 5

having open credit that you don't use is bad for your credit score.

the best credit cards to have are the ones you use and pay regulary.

if you ask the people at the bank you use they can tell you.....

I the lender want to see that you pay your bills in a timely manner.
it doesn't matter the age of the loan, just that you are being on time.

so having open credit does not establish that,

but it does say,
well, he has this other amount he can get at any moment, that could strain his ability to pay me back....

Answer 6

Leave the account open and cut up the card. Creditors don't like to see 'account closed' in the credit bureau.

Answer 7

No.

You must never close any credit cards accounts or your credit score will be lowered.

Answer 8

never close your oldest account, it un-ages your credit file and drops your credit score.

Answer 9

It should, but if you are going to pay it off, why don't you just leave it open?

Answer 10

no, you should not becaus the bank takes interset from the card