Wil it hurt my credit rating to close open, zero balance credit cards?
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Anonymous
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We moved some things around and got lower-interest credit cards. We will be carring some balances that we are working on paying off.
In the meantime, I have these high limit (think 25K) credit cards with no balance. I'd really like to just close them but I'm wondering what effect that will have on our credit scores. OTOH, I think it might not be good for our score not to have much available credit, i.e. to appear maxed out. What's the best approach for how much credit to maintain in order to optimize credit scores? |
Anonymous
| Keep your utilization around 10% for best scoring, regardless of what you open/close. |
Anonymous
| Length of credit historyis taken Ito account. I closed a high interest, zero balance card I had from college (10 years plus at the time) and it really hurt my score. It looked like my history was only 5 years long at the time. It may not matter if you're not looking for new credit soon, but something to consider. |
Anonymous
| Please define utilization ... so 10% of total available credit should be used? |
Anonymous
NP here. I'm also curious as to whether having utilization below 10% will hurt your score. |
Anonymous
| OP, do not close credit card accounts where you have a high limit, long history and zero balance. That would without question negatively affect your credit score. If you are worried about using them when you have balances on the other new cards, put them in a cup of water in the freezer so they are encased in a block of ice by the end of the day. |
Anonymous
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PP back again - this is a great thread which has some of the reasons why and links to more.
http://www.dcurbanmom.com/jforum/posts/list/324343.page#3920500 |
Anonymous
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First, the best thing for your credit score is to pay off all credit cards every month. The interest rate should not matter on a day-to-day or month-to-month situation, but should only matter in an emergency or unusual circumstance. If you are not paying off your credit cards each month, you should either be recovering from a financial emergency or you are living outside your means.
There are a few cases where you should close such accounts. First, if you are paying any type of maintenance fee, such as an annual fee, then you close the account if you are not using it. If you are planning on acquiring additional debt of some sort, then you close it because the largest element of your credit score is your debt to income ratio. You do not want your debt or debt limit to be too high. So, if you are planning on buying a car with a car loan, buy a house, take money from a HELOC, etc then you can consider closing those accounts. Otherwise, leave the accounts open, charge a little bit on them each month and pay it off so that you have interest fees and it will help maintain a good credit history. |
Anonymous
| Given your debt load, I don't think you need to worry about your credit score. You don't need access to more loans. |
Anonymous
This is incorrect. The length stays on your report for another ten years after closing it, if it was closed in good standing. 7 years if not. If anything, it was the utilization that hurt your score. |
Anonymous
No, it won't hurt it. But the question was what is best for optimal scoring and 10% seems to be the sweet spot. |
Anonymous
| no leave them open duh |
Anonymous
This is not true and certainly "with question". The only way it would hurt the OP's score is if closing the card makes her utilization go too high. And that is remedied by paying down another trade line on your report. |
Anonymous
Yes, exactly. |
Anonymous
No, my credit score is high. I don't want to lower it, that's all. |