To Close or Not to Close??

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Replied by Wanderer on topic To Close or Not to Close

Closing an account in "good standing" generally will stay on your credit reports for about ten years. Not using an account for six months to two years (depending on the lender) will likely get closed for "inactivity" and shows in the credit bureaus as: "closed by credit granter". Now in truth, the note does not affect your credit and for a lender to find it would take a manual review to see the note. There are various schools of thought on closing credit cards. Some feel you should eliminate cards you don't use while others believe you should keep all your non-annual fee cards. One matter to keep in mind, a closed account drops off your credit report and then it may affect your "oldest account" status and your "average age of accounts". So you need to weigh what fits your way of looking at credit. Speaking for myself, I believe I have a thick enough credit file with active accounts to soften the loss of older closed accounts and I don't want to worry about identity theft and using an account I don't use. With that said not everyone has credit files old enough or thick enough to drop accounts in their early credit life. So ... it is something you need to weigh.
Last edit: 3 years 9 months ago by Wanderer.
3 years 9 months ago #16
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Replied by JGibbs on topic To Close or Not to Close

JacksonM wrote: Can it hurt your credit to not use an open card? I stopped using it because I opened a newer one with better benefits. The last posted payment was about a year ago. Should I be making occasional purchases with it?

I had a card closed without warning because I hadn't used in a couple of years. That was before eight years ago though. It didn't hurt my credit at all. Just disappeared all together.
3 years 9 months ago #17
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Replied by JacksonM on topic To Close or Not to Close

Can it hurt your credit to not use an open card? I stopped using it because I opened a newer one with better benefits. The last posted payment was about a year ago. Should I be making occasional purchases with it?
3 years 9 months ago #18
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Replied by FrankN on topic To Close or Not to Close

I generally do not close accounts unless there is a fee AND I don't use the card anymore. Otherwise I just keep it open to continue to help my credit score.
4 years 7 months ago #19
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Replied by Curry on topic To Close or Not to Close

That sounds logical to me RAINA. Over time, I don't think that closing an account will make much of a blip on the screen. Even if your score were to drop 10 points, it won't take long to bring that back up with wise card management.
4 years 7 months ago #20
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Replied by Raina on topic To Close or Not to Close

So you are saying that if my balances on my cards are paid I shouldn't close my account as this will eventually lower my credit score? If I keep the cards and just occasionally use them will that maintain my credit score?
4 years 7 months ago #21
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Replied by Wanderer on topic Close or not

What people are referring to is the fact you will be eliminating credit limit(s) that could increase your utilization by the shear fact you have less credit available. Now if you pay off all credit cards that can lower your scores due to the fact you are not utilizing credit. If scores matter (depends on if you will be credit seeking) the combination of loosing available credit and no debt showing can lower credit scores (speaking with experience as this is exactly what I did - closed six credit cards worth $50K CL and payed off my debt and my credit score dropped from 848 to 811 on the TU 08 300 to 850 scale). Yes, I am bummed but I knew there was a risk so no sympathy for myself!
4 years 7 months ago #22
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Replied by Medi on topic Close or not

I've read we should pay off balances on other cards as much as we can before we close a card. It shows zero credit utilization rate, so the impact won't hurt too much and short-lived. Does it mean that we worry too much about the scores?
4 years 7 months ago #23
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Replied by FrugalFran on topic Close or not

patse wrote: I was always told to close any cards that I don't use. Too much open credit is a bad thing, they say. I don't know how accurate this is though. I also heard that having long-term cards has a positive impact on your credit rating.


That would make sense in a logical world, but as we all know, the credit card universe is pretty screwed up. It doesn't make a whole lot of sense to me that closing accounts you don't use could negatively impact your credit, but that seems to be the thought process these days.
5 years 3 months ago #24
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Replied by patse on topic Close or not

I was always told to close any cards that I don't use. Too much open credit is a bad thing, they say. I don't know how accurate this is though. I also heard that having long-term cards has a positive impact on your credit rating.
5 years 3 months ago #25
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Replied by Breakinger on topic Close or not to close

My husband and I have three credit cards, one store card, a mortgage, and one other loan. We want to pay off the store card and close this, but I think it might hurt our credit instead. Maybe just paying things down is the better option?
5 years 3 months ago #26
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Replied by FrugalFran on topic Close or not to close

I am in the same boat. My husband and I have three or four cards between us that we want to close, but I am so afraid of a negative impact. We never use these particular cards and they have annual fees. I very much appreciate the advice given here and I'm trying to wrap my head around it to make sure I do the right thing.
5 years 3 months ago #27
  • SAR1954
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Replied by SAR1954 on topic Re: To Close or Not to Close??

Thank you for your feedback. This is very helpful. As far as credit cards go I have 2, a Visa from US Bank (0% first year, 19% thereafter), and a Visa from a local credit union (10.99%), and 3 store cards. Because I am at the rebuild stage, after reading your post, it makes sense for me to leave them open, use them every now and again for a small purchase and quickly pay them off just to keep them open to build good history. I think I am at the point where I should just focus on on-time-payments and just let things be as they are for now. Thanks again. :cheesing:
8 years 9 months ago #28
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Replied by Wanderer on topic Re: To Close or Not to Close??

I have seen this question asked with several different answers so I am unclear of what to believe. If you close an account does this hurt your score? I have a few credit card balances that I combined into one. Should I leave these open or should I close them? Or, once account is closed it doesn’t count towards your credit history? There is are so many factors that can help or hurt your score, sometimes this confuses me.


Your confusion is justified. There really is no simple one size fits all answer. I will give you some things to consider.

In the event a person has a thick credit bureau file (several bank cards, department store cards, installment loans and a mortgage etc) that goes back say 12 years or more with an average account age of six years or more with virtually no inquiries (one or two...) or bad marks at the credit bureaus along with utilization that is not excessive (likely under 10%) closing a credit card will have a minimum impact (score may drop a few points say 4 to 8 if any) and will bounce back in a few months.

For a person with a thin credit file (few cards, installment loans, mortgages etc), bad marks, heavy utilization (say more than 35%) the impact could be more points and not alot of old accounts or a long average age of accounts. Also, inquiries feed this so we need to NOT have many.

Note closing a good old account still may leave the account reporting "paid" and in good status for up to ten years when they generally fall off (note that some fall off sooner).

Frustration... building credit gets us lots of sub-prime cards with small limits in the beginning and terms that are not as favorable such as AF's, high Apr's etc. Then as we build a solid credit record we are able to secure prime loans and cards with favorable terms. We can't use all the cards with little limits and we want to loose them (close). Thus the quandary!

Our oldest account and average age of account still drives off of the cards early in our credit life cards. Now, a thick credit file generally has enough to carry an occassional account closing and over time we can weed our credit garden without taking too many point hits remembering as a thick file it will bounce back fairly quickly.

Some writers will say take the hits, get over it and move on. Others writers will say keep all accounts. A third line of thinking is go slowly in your weeding the credit garden. The real key is the unique credit file each of us has. I found for myself that too many cards is hard to maintain and I don't want all the credit I have but my old accounts are those from the sub-prime days. For me my utilization formula is 1.5% not 10% or 35% (played with my real credit file until I found the number). Many of my sub-prime cards are closed now and still report positive but I removed an installment loan of over ten years in age and I still have NOT made up the points it cost me from two years ago (Transunion).

So to sum all this up, it is really individual and I suggest a careful move if the credit file isn't very thick. In the early days we need all the friends we can get (credit reporting). The "age of accounts" and "average account age" info I was using the 12 years and 6 years came from a credit bureau service that showed some of the better break points for getting higher credit scores. This too is another debate between credit information service providers. In the end I find it all too vague. One rule that is not: "the man who has the gold rules" credit lendor.
8 years 9 months ago #29
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I have seen this question asked with several different answers so I am unclear of what to believe. If you close an account does this hurt your score? I have a few credit card balances that I combined into one. Should I leave these open or should I close them? Or, once account is closed it doesn’t count towards your credit history? There is are so many factors that can help or hurt your score, sometimes this confuses me.

:dumbfounded:
8 years 9 months ago #30