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#1
06-01-2006, 01:21 AM
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Closing credit accounts?
I currently have 3 credit cards and an MBNA loan open. They are:
GM MasterCard - $18,000 limit Chase MasterCard - $18,500 limit Discover Card - $5,200 limit MBNA Credit Line - $18,300 limit I only use the GM card and pay the balance each month within the grace period. The rest have gone mostly unused for the last few years. Is there any advantage or disadvantage to cancelling some of these other cards? Will it help or hurt my credit? Will it help or hurt getting a home loan, say, a couple of years from now? I'll probably want to keep two cards. 
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#5
06-01-2006, 12:35 PM
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Re: Closing credit accounts?
Closing a "paid as agreed" account lowers your FICO score. Much better to keep accounts open and not use them rather than closing them and lower your score.
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#6
06-02-2006, 02:57 AM
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Re: Closing credit accounts?
[ QUOTE ]
Closing a "paid as agreed" account lowers your FICO score. Much better to keep accounts open and not use them rather than closing them and lower your score. [/ QUOTE ] Really? That's kinda dumb. I would have thought closing these open accounts would make it easier to get new credit (like a mortgage), because then they don't have to worry about me later overextending myself by maxing out all this unsecured credit.
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#7
06-02-2006, 03:32 AM
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Re: Closing credit accounts?
[ QUOTE ]
Closing a "paid as agreed" account lowers your FICO score. Much better to keep accounts open and not use them rather than closing them and lower your score. [/ QUOTE ] While this is true in most cases, it is not always true. If you have some older accounts, closing newer accounts can actually increase your average age of credit thus raising your FICO. Of course, this assumes your utilization isnt throw out of whack when you close the newer accounts. Unless you really know what you are doing though, it is generally just best to keep all accounts open.
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#9
06-02-2006, 11:51 AM
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Re: Closing credit accounts?
Do not close the accounts. If you are worried about using them, just cut up the cards.
Your credit score is calculated on a variety of factors, some of which are: - credit used as a percentage available (the lower the better) - age of credit lines (the older the better) By keeping these accounts open you will increase your score, and thus lower the rate you will pay on a mortgage. But if they have an annual fee I'd close them.
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#10
06-02-2006, 11:58 AM
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Re: Closing credit accounts?
[ QUOTE ]
But if they have an annual fee I'd close them. [/ QUOTE ] Your best bet is to call the card issuer and see if you can get the card switched to another they offer that doesnt have an annual fee.
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