I'm in a position to pay off my credit cards and am looking for thoughts on the benefits of keeping them open or closing some. All accounts are in good standing and I have very good credit if that makes a difference. I have 4 cards and was thinking of dropping the two newer, lower limit cards and hanging onto the two older ones (I've read long standing accounts are good to have?) that have higher limits and keep them in the damn safe so I don't bury myself again. Or will closing them ding my credit?

I do know if you don't use one long enough they'll close it on their own. I've had that happen and I don't recall seeing a drop in my credit score.


Any thoughts are appreciated!

Do you bank with chase? If so, they have a free credit monitoring service and it has a what if feature where you can model your credit score if you close the accounts.

Keep the cards open. Periodically request that the limits are increased (once a year is good). You need to keep your available credit line high to improve your score.

Also, average account age improves with more accounts. You have 4 accounts now, and they will all age and grow mature. In the future, when you open another account, the average won't be affected as much.

I have been monitoring and modeling my credit over the past 10+ years. Biggest factors are account age paid as agreed, debt-to-credit ratio, and debt to income.

Since you have four cards I don't think closing two will harm you long term.

I have two major cards, had them for ten years, I won't close them. It helps my credit rating by using them every so often. I also get FICO scores and identity notifications.

Thanks for the input!


I've had Identity Guard for longer than I can remember. I'm mostly chained to a desk now but for 9+ years I basically lived out of hotels for work and had either the work card or one of mine compromised every year or two.

Keep all 4, that is a normal amount to have for a lot of people. Closing 2 will definitely lower your score. Use each one about twice a year for even a small purchase and pay it off, to keep them active.

quote:

Originally posted by Aeteocles:
Keep the cards open. Periodically request that the limits are increased (once a year is good). You need to keep your available credit line high to improve your score.

Also, average account age improves with more accounts. You have 4 accounts now, and they will all age and grow mature. In the future, when you open another account, the average won't be affected as much.

I have been monitoring and modeling my credit over the past 10+ years. Biggest factors are account age paid as agreed, debt-to-credit ratio, and debt to income.

Both you and the OP are talking about credit scores and "debt to income" isn't used in determining your credit score. It is used by lenders as a tool they use (along with credit score) to determine if they will lend to you but it has nothing to do with your credit score and you can't use it to "monitor and model" your credit score.

I'd keep them, so long as there aren't any outrageous annual fees that you can't get around.

I sill have a VISA card I got after high school. It has an 8% APR. I'm never dumping that one.

You never know if you will come to a point where you need the credit so I would keep them. It doesn't hurt to have open credit lines, it actually makes you look good financially.

No expert here but...

Age of your credit history, and percent of credit used both add to your score. I think.
I have three old cards I never use but never closed. One is 17 years old, I never cancelled them. I just let the cards expire, and cut up and threw away the ones they sent me to auto renew them without even activating them. They haven't sent me a new one in years but the accounts are listed as still active with zero balance and 100% on time payments.

Must work... a couple years ago I was told by a car dealer I was basically at the theoretical maximum score.

If you keep the newer two open and have no plans to use them, you could "lock" the cards so if the number is compromised the card can't be used.

Keep them open, but make sure to charge something small on them every year or so just so they're not closed to inactivity.

My approach is to have a small number of credit cards (I have one account, my wife has one account). We most often carry no balance, but do use them occasionally.
I have no desire to monitor, model, or otherwise manipulate or obsess over my credit score.
Pay your bills, your credit score will take care of itself (and you, by extension).

It won't hurt anything to leave the accounts open. If you do close any, make it the newer ones.

I'm going to go against the crowd here and suggest you drop the two newer ones like you mentioned.

There are a lot of theories on what goes into earning a high fico score.
My personal opinion is to minimize your accounts and pay off your credit cards off each month. I know some will say that the ratio of available credit to the amount of used will affect the numbers but it has not affected me.

I only have two cards; one personal and one for my business. I always pay them off each month and my score has been +\- 835 for the past 10 years or so.

How important is a stellar credit rating to you? Do you borrow large sums of money routinely? Is having a slightly lower interest rate all that important? Will having two, not four, cards harm your credit score at all? I doubt it.

I'd close the two newer ones just to avoid the possibility of having them compromised and having to deal with fraudulent charges. What isn't there can't be misused.

I don't know what modeling is. I have 2 credit cards, neither of which have a balance. 1 of them is a Discover card that I've had since 1997. You can see your FICO score with Discover, both online and on the printed statement. I don't model/maintain/actively watch/whatever, and here's my score...



I say close 'em.

I read an article a few months ago that said the credit monitoring companies were going to change the methodology they used to calculate your score. Having "too much" available credit will ding you. They view it as a risk if you have, say $50k in available credit. I think my limit is $19k on 1, and $13k on my Discover. I really don't need $30k+ in credit on a card.

quote:

Originally posted by LBTRS:
Both you and the OP are talking about credit scores and "debt to income" isn't used in determining your credit score. It is used by lenders as a tool they use (along with credit score) to determine if they will lend to you but it has nothing to do with your credit score and you can't use it to "monitor and model" your credit score.

Right, got over excited about helping out the OP.

How much money you make doesn't affect your score--but it does affect lenders decision to give you more money.

As an aside, the higher your stated income to the bank, the higher the credit limit they'll extend to you on your cards. Having a higher credit limit on your cards gives you more buffer space in you debt-to-credit ratio.

Your revolving debt-to-credit ratio looks at the total amount of credit you have, and then looks at the amount of debt you have on any particular day. Even if you pay off your card every single month, using your card up to your limit can still hurt your score if that debt is captured on whatever day the reporting bureau pulls data from the credit card company.

For instance, if you put $1500 in expenses on your card every month and pay it off, and you have $10,000 in available credit, then your score might reflect that you are carrying a 15% revolving debt-to-credit ratio. This is even if you are paying off the card every month. If you had a couple extra cards that you aren't using and had $20,000 in available credit, debt-to-credit ratio might report only as 7.5%.

Your credit score changes a little bit when your debt-to-credit moves up and down, but moves more when you cross certain thresh holds--crossing from 9% debt-to-credit to 10% might cost you an additional 20-30 points on your score.

20-30 points may or may not be a big deal depending on where your credit is. If you go from 850 to 820, may not be a big deal, but moving from 670 to 700 could be the difference between qualifying for a 0% apr car loan, or paying 2%,or getting the best rate on a home loan.

I have 4 cards, 2 of which are through Chase. I use the Amazon account a lot and the other one I haven't used in years. I just recently got a notice from Chase that they are closing the inactive account. I'll let that happen because I just don't see me ever using it anyway.

Jim

Keep the cards open.

Get some more cards, too. There are great deals out there for starting new accounts. Up to $450 in CASH if you spend a set amount over a couple of months. Pay them off every month, and enjoy 2% cash back.

The real life fact that it is far better to have available credit and not use it than to obtain a credit increase when you do need it. You obviously need to have enough self control not to use this credit if you don't need it.

The banking business is very cyclical. Sometimes banks like to lend, and sometimes they don't. Sometimes they just decide that they are going to reduce your credit line, or cancel your card. So keep at least 6 cards and use them occasionally, but pay them off monthly.

The main factor in obtaining a favorable loan is a history of prompt payment of all liabilities.