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Lame and Boring Question...
Posted on 8/2/11 at 8:13 pm
Posted on 8/2/11 at 8:13 pm
So I just recently signed up for the Chase Sapphire Preferred card, so I can cash in on the 50,000 bonus points offered (up to $625 in free airfare - going on a trip soon, so i figured WTH). I really don't need/want another credit card to be used as a factor when checking my credit. I currently have 3 other "normal" cards and a few other store cards that I opened to get 0% interest on purchases. ie best buy, lowes, ect.
Don't have any balances on any of them, besides what has been put on the one card I actively use for all my expenses and pay off in full at the end of the billing cycle.
Advice on closing credit cards? TIA
Don't have any balances on any of them, besides what has been put on the one card I actively use for all my expenses and pay off in full at the end of the billing cycle.
Advice on closing credit cards? TIA
3
Posted on 8/2/11 at 8:20 pm to TigerDeBaiter
Suze Orman says never close Credit Cards. Dave Ramsay says close them...you decide.
Posted on 8/2/11 at 8:27 pm to Paul Allen
Hmmm... I'm guessing Suze thinks this bc she is paid by FICO and Dave says this bc he hates debt. I am not going to close my oldest account, but will closing one opened "in the middle" have much impact?
Posted on 8/2/11 at 8:42 pm to TigerDeBaiter
closing your cards lowers your credit score
Posted on 8/2/11 at 8:54 pm to Zilla
Yeah, I have heard this too. On what basis though? I was always under the impression that is was based on utilization (which, if you don't carry any balances shouldn't be an issue) and length (and by not closing the oldest account shouldn't effect either?)
Are my assumptions correct or am I missing something?
Are my assumptions correct or am I missing something?
Posted on 8/2/11 at 9:43 pm to TigerDeBaiter
i think the thinking is the more credit available to you, the less likely you are to bk...but i can't remember, there is prob more to it than that... im too tired too think much harder than this 
Posted on 8/2/11 at 9:45 pm to TigerDeBaiter
quote:
I was always under the impression that is was based on utilization (which, if you don't carry any balances shouldn't be an issue)
Well, sorta. (Disclaimer: I don't consider myself an expert).
Credit card accounts still report the statement balance to the 3 bureaus (or to at least Experian which is the most recent I checked of mine) even if you are paying the full balance each month. So, even if you are charging $3000/month and paying it off in full, your credit report will show that you had a $3000 balance. (Now if you paid off a balance and then didn't use the card at all for a month, it would obviously report a $0 balance for that month).
Utilization is the ratio of debt/balances to credit. So what happens is that when you close off a card, you decrease the total credit line available to you, inherently raising your utilization and subsequently possibly lowering your credit score.
quote:
length (and by not closing the oldest account shouldn't effect either?)
Well it's average age of history. So if you close a middle age one, it will make your average "age" less. (On a side note, Amex is apparently really good about this. If you open up a new card underneath them, they will backdate the new account to when you first opened up an Amex account.)
But anyway, I'm of the mindset that unless you are actively seeking new lines of credit or in the near future seeking some, I wouldn't worry too much about closing a few accounts even if it dinks your FICO a little bit. If you are really concerned, just throw the cards into a drawer and forget about them.
Posted on 8/2/11 at 10:09 pm to Puffoluffagus
quote:
If you are really concerned, just throw the cards into a drawer and forget about them.
Don't know much on the topic, but after the articles I've skimmed through I think this is the route I'm going to take in the next couple of months here.
Posted on 8/2/11 at 10:54 pm to Puffoluffagus
quote:...
age of history
Posted on 8/2/11 at 11:06 pm to TigerDeBaiter
Don't close your oldest card but if you have a small limit credit card like $200 max that could actually be hurting you. It shows that lenders are not confident in lending you more then $200. The higher the limit the more trustworthy you look to future lenders.
My oldest card is a Dillards card that I haven't used in 3 years but its was my first form of lending so I keep it open.
My oldest card is a Dillards card that I haven't used in 3 years but its was my first form of lending so I keep it open.
Posted on 8/3/11 at 1:26 pm to Puffoluffagus
quote:
Well it's average age of history. So if you close a middle age one, it will make your average "age" less. (On a side note, Amex is apparently really good about this. If you open up a new card underneath them, they will backdate the new account to when you first opened up an Amex account.)
This is the caveat type thing that I was looking for.
Owell, Won't be looking for a home, car, or any other major loan in a while. Probably just close one to not have so many open out there. (seems like that could look bad too) Don't hate the playa' hate the game.
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