Does it damage your credit rating to cancel a credit card?

bluestateguy

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Thu Jun-07-07 03:05 PM
Original message

Does it damage your credit rating to cancel a credit card?

I'm on track to pay off the balance on two of my credit cards by the end of the summer. Now I am wondering if I should cancel them once they are paid off. I have a high enough credit limit on my third credit card, such that it could cover for me in an emergency.

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NMDemDist2

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Thu Jun-07-07 03:06 PM
Response to Original message

1. no, it actually hurts more to have a high amount of available credit

whether you are carrying a balance on the card or not.

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DrDan

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Thu Jun-07-07 03:07 PM
Response to Original message

2. I believe just the opposite

too many credit cards can impact your credit rating

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mainegreen

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Thu Jun-07-07 03:18 PM
Response to Original message

3. Depends on how many cards you have, the limit on each, and how close in time they're cancelled.

As well as how much debt you have elsewhere.
Credit scores are very sensitive to 'change'. They don't like change.

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caty

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Thu Jun-07-07 03:40 PM
Response to Original message

4. When you cancel

your credit card, you wipe out your credit history for that card. If you always made your payments on time, that account will help your credit rating score. If you don't want to use the card anymore, just stop using it and cut it up.

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pagerbear

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Thu Jun-07-07 03:50 PM
Response to Reply #4

6. I don't think that's right

...based on my own experience. On my own credit history I see a number of accounts that have been long closed, with my payment record for each. It's only on a report of current accounts that you wouldn't see a closed account.

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lizerdbits

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Thu Jun-07-07 03:56 PM
Response to Reply #6

7. I've seen that too

Although technically they weren't even my accounts. My dad gave me a credit card to his account in college and it showed up on my credit report. Another one of my parents accounts showed up on my report even though I never had a card issued in my name for it. I was able to get them removed because the fewer accounts the better is what I was told when getting a mortgage.

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Omphaloskepsis

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Thu Jun-07-07 03:48 PM
Response to Original message

5. I don't know the answer to your question.

But I would cancel them for the simple reason that nobody can steal those numbers if you ditch the cards. The odds are slim that someone steals your numbers, but repairing it if they do will take years. Canceling the card would only be a minor ping on your TRW.

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MistressOverdone

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Thu Jun-07-07 03:57 PM
Response to Original message

8. No, but it looks good if you have it and keep a 0 balance

or a very low balance. Maxing out is big points against you.

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LSK

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Thu Jun-07-07 04:01 PM
Response to Original message

9. yes

Edited on Thu Jun-07-07 04:02 PM by LSK

They want to see that you are able to carry lots of credit without actually using it. It shows that you are "responsible".

Also they want to see you have more than one card.

Cancel the one with the lowest limit or shortest history on it if you must cancel one.

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Lex

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Thu Jun-07-07 04:03 PM
Response to Original message

10. Make sure they note it as "customer cancelled" and not

cancelled by the bank.

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Scout

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Thu Jun-07-07 07:58 PM
Response to Original message

11. cancel the one with the highest interest rate, annual fee...

and request written confirmation of the voluntary cancellation.

I was told not to cancel more than one every few months or it will look bad on your credit.

You want to have some available credit, not too little and not WAY too much. Use them to auto-pay your monthly bills, and pay them off each month. Especially use them, but pay off monthly, if you get points, cash-back, frequent flyer miles, etc.

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Connonym

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Thu Jun-07-07 09:09 PM
Response to Reply #11

12. plus making regular monthly payments increases your credit score

I think Scout's idea is very sound. Also, I personally think it's a bad idea to only carry one card. I think it's always good to have a backup with you just in case.

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