Does it affect your credit rating if you pay off or cancel cards or opt out of changes they attempt to make?

Question

Okay, I'd like to keep my high credit score though I've recently bailed out of the corporate world to work more meaningful paying little. I've paid off 2 credit cards with very small balances. Two other cards with low APRs I'm working down, but I COULD pay them off in total. What's the best way to keep a high credit score with an unstable income but an excellent credit history? The main reason I care is I own a house and I may sell to downsize, and thus might need to qualify for a mortgage again. No car payments. Does paying off all cards and/or canceling them throw up red flags? Thanks to all you smart folks who understand all this stuff a lot better than I do.

Answer 1

it doesn't hurt your score to pay balances off...in fact it looks good to other creditors if you do...but it does hurt if you pay them off and then close the account...it you have the means to pay off your balances in full, then do it but keep the account open but with a balance of $0.00...basicly, just don't use the cards again...some credit companies have a "inactive fee". if your credit card company uses this scam, then use the card for something very small with the intention of paying it off each month. hope this helps

Answer 2

What you want is lower debt, and lower credit lines. If creditors see that you have used and paid your cards, that is good. Too much outstanding debt is bad. Also, too much available credit can hurt you. Example: with your new, lower income, some creditors may be worried that you have access to $40k on your cards. Knock your number of cards down, or ask that your credit lines be lowered. Two cards with $5k limits should be enough, but not too much. Accounts closed by you, not the creditor, should not hurt you.

Answer 3

Paying off a card is good, but you still might want to keep 1 that is low interest. That way the creditors can see that you make your payments on time.