Once a credit card debt is paid off is it better to close the account or leave it open for higher credit score

Answer 1

Leave credit card account open! It will help your score by 2 ways:
1) debt to credit limit ratio is low ( positive factor )
2) The longer that card is open it is a positive factor for your credit history! ( the longer the better!)

Answer 2

Don't know where you read that keeping an almost maxed out balance helps your score, but you need to stop taking that advice!! Carrying credit card balances of more than 30% of your limit, hurts your score. Pay off the balance and your score rebounds. Further, there is absolutely no benefit to carrying balances. It just cost you interest. The best way to handle a credit card is to pay the balance in full every month. That way you build good credit history and avoid interest. You don't need to pay the balance before the statement. Just wait for the statement and pay by the statement due date. It is also no longer good advice to keep all credit card accounts open. Besides the potential for fraud and ID theft, some cards are now charging monthly fees for inactive accounts. If you don't use the acount and don't want the account, close it via letter and request written confirmation that the account is closed and 0 balance. Keep that confirmation forever. A closed account in good standing remains on your credit report for at least 10 years. It just doesn't count as much as an open, active account. If this is your only credit card, you probably want to keep it open so you can continue to build credit history. Just pay the balance in full and save all that interest.

Answer 3

Well, seems like everyone is divided on this issue. lol.
It depends...leaving it open can help your debt ratio (a factor which makes up 30% of your credit score) as well as your lenght of history (a factor which makes up 15% of your credit score). For those two areas, it could be beneficial.
BUT if you have no intent to use it, it would be better to close it and here are two reasons:
1- Leaving an account open and unused does not raise your score. You have to *use* the credit to make any type of impact on your score.
2- If you will be applying for a major loan soon (car, business, mortgage), the lender will total up all of your available credit. If they see that you have credit cards just sitting there, begging to be used, you begin to look like a risk.

I know I didn't answer your question one way or the other; as it was not my purpose to do that. You will have to come up with the best decision for your situation. I just wanted to share some pros and cons with you. Good luck!

Answer 4

Leave it open and avoid the temptation to run up a new balance. Those that are telling you to close it don't know what they're talking about and those are telling you the longer you leave it open and the lower your debt to available credit ratio is the better (closing the account WILL raise that ratio and hurt your score) are absolutely correct.

Answer 5

It would be better to keep the credit card account open and pay off the balance each month. This way it will increase your credit score and it won't affect your debt to income ratio, as the account won't have a balance on it.

Answer 6

technically, the more available credit you have, the better your score, but realistically, close the credit cards. you'll be tempted to use them, otherwise. i would keep one major credit card with a low apr and fairly decent spending limit for emergencies, but in cases of clothing and department store credit cards, i would cut them up immediately. the apr on those are usually around 22%-28% and the finance charges on them are usually outrageous.

Answer 7

Close the account... otherwise you end up putting yourself in even more debt.

Answer 8

close it