example: to pay off credit card you should payoff the one with the highest interest rate. This advice was on Yahoo finacial page, but it did not say what to do with the card after it was paid off. I heard if you cancel the credit cards your credit score is lowered. So what do you do with the card?
2007-07-06 18:33:53 · 14 answers · asked by Danni 1 in Business & Finance ➔ Credit
You are getting some REALLY bad advice here!!
You ABSOLUTELY get credit on your score for the length that a credit card has been open. If there is no annual fee, DO NOT close it.
Use it every few months for a few purchases, and pay the bill in full when it comes in. You will not pay any interest if you pay it on time.
The more open credit that you have and the less that you use shows the credit bureaus that you are not desperate.
To get a good mortgage loan, they like to see at least 4 different credit accounts that have been open for AT LEAST 2 years.
If you pay a credit card off in full after you use it, who cares what the interest rate is, you don't pay any.
Your credit score ONLY goes up by using credit and paying your bills on time, it doesn't go up by cutting up your cards.
It's better to use a few cards sparingly and pay all bills on time than to use 1 card only.
You only got part of the information correct.
2007-07-06 18:46:44 · answer #1 · answered by CommonCents 4 · 0⤊ 0⤋
Great question. My advice is to leave the account open (which helps your score) but not use the card anymore, unless you are going to pay it in full every month.
Closing accounts typically lowers your score because it appears you have a "younger" credit history than what you actually do.
The interest rate in a card should not concern you, if it's paid off every month. I actually carry a store card that has a whopping 26% interest, but I also get as much as 30% in discounts when they have sales if I put my purchases on the card, but as soon as I get home, I send a check, so it's no different than if I paid cash the day I make the purchase.
Just keep the card at home, and all should be well.
2007-07-07 06:10:13 · answer #2 · answered by Expert8675309 7 · 0⤊ 0⤋
NO! Do NOT cancel the card. That is worse for your credit. Part of your credit score relies on having cards for a long time, so keep this card and use it once every five months or so, and pay it off immediately: don't carry a balance. Also, part of your score relies on having credit, so closing the account reduces the amount of credit you have. Instead, now that it's paid off, call the company and negotiate for a lower score, saying you won't use it if the score remains high. If they say no, wait a month and call again: sometimes a different person will say yes to you. Also, learn from this to pay off your credit cards each month and stay out of credit trouble.
2007-07-07 01:36:27 · answer #3 · answered by Katherine W 7 · 2⤊ 1⤋
Keep it, and rarely use it. If you do use it, make sure that you pay the balance in full each month.
Of course this advise only applies to CCs with low or no annual fees. If you have a high fee just for having the card, or one that charges a "participation fee," cancel it immediately.
You shouldn't worry too much about how closing a cc lowers your score. Your credit score is primarily composed of payment history and debt amount. Everything else is nickles and dimes.
2007-07-07 01:43:15 · answer #4 · answered by Luke D 2 · 0⤊ 1⤋
You should pay off the Credit card balance in full rather than pay finance charges each month.
Your score only goes down if you cancel a card immediately after you received it. It shows the credit bureau you cannot maintain a card. Of course your score goes down when you get a new credit card but if you maintain it, your score will go back up with the payments you do on time.
It's best to keep a card for a year minimum before closing it. Just keep the card on the side and use it for emergency.
2007-07-07 01:36:59 · answer #5 · answered by Anonymous · 1⤊ 4⤋
call the credit card company and try to talk them into lowering your rates by saying your going to cancel your card and go with someone else
2007-07-07 01:42:36 · answer #6 · answered by hi_iduntcyber_doyou 5 · 0⤊ 0⤋
Keep the credit line open. Having credit lines that you have had for a long time, and available credit on your credit report will look better for you. Cut up the card if you want, but I would leave the account open.
2007-07-07 01:36:40 · answer #7 · answered by Heather 5 · 2⤊ 1⤋
Make sure you have at least three items reporting on your credit or else you won't get a score due to lack of history. If you have three or more loans/cards then cancel that high rate card. It won't mess up your credit by cancelling.
2007-07-07 01:38:16 · answer #8 · answered by xphillipjrx 2 · 2⤊ 2⤋
you can cancel it if you want but if it is the only credit card that you have then I would just cut it up and leave it open if you don't want to use it. If you have other cards go ahead and cancel it.
2007-07-07 01:37:58 · answer #9 · answered by Jen 3 · 0⤊ 3⤋
Don't cancel it, just hang onto it (not in your purse) and don't use it - it will show as a good and current account on your credit report.
I've got two accounts I haven't used in 20 years that show as current accounts on my credit report.
2007-07-07 01:37:23 · answer #10 · answered by heart o' gold 7 · 3⤊ 1⤋