Close credit card accounts

[wjones]

Recently, I received my credit report that I requested and saw that I have too many credit cards... some of those that I've forgotten (like those retail/department store cards, only used once for those cards since they gave discount if apply the cards.)!!!

Now I want to close all those credit cards that I'm not using. Do you think closing 10 accounts at once will hurt my credit score? If it will, how should I do it to get rid of those stupid cards?

 

[her209]

I think it will only help your score.

 

[Vic]

Close the unused (and zero balance) merchant cards, but leave any VISA/MC account open.
Closing unused accounts in a dual-edged sword for your credit score. Having too many accounts can be bad, but closing off a lot of available credit line can be bad as well. Either way, it's not like a missed payment or anything serious.
Always leave at least 4 accounts open, whether you use them or not. Some creditors require 4 open accounts or they will decline you.

 

[Aceshigh]

Good advice from Vic.

Leave the oldest visa/mc accounts open. They are helping your score, even if you have a zero balance and never use them.

I would close the store cards though.

I once had $14,000 cc debt, got a great new job and paid it all off diligently. When I was done I closed all my accounts and this actually lowered my score. Don't make that mistake.

 

[Kaervak]

Like the others have said, keep the older unused Visa/MC/Discover accounts active, but nix everything else. It's always a good idea to get you credit report at least once a year. Ran one for my mom and found several accounts that she had no idea existed. Got everything taken care of, so check your reports. Never know what you'll find.

 

[NewForumMember]

If 4 open accounts is really the minimum for many creditors thats pretty stupid. One MC/VISA is enough for me even though I have four. If someone only got what they needed they would lose out I guess.

 

[Vic]

Originally posted by: NewForumMember
If 4 open accounts is really the minimum for many creditors thats pretty stupid. One MC/VISA is enough for me even though I have four. If someone only got what they needed they would lose out I guess.

All open accounts, not just credit cards. Car loans, mortgages, etc. It's usually a requirement if you want to apply for a mortgage. There, the lenders want to see that you have not only the ability to repay credit, but to manage credit (i.e. have it and not abuse it).

 

[larciel]

when you close it, be sure the balance will be zero after the following month... (/me is victim of f*cking idiot system that can't calculate interest) now my credit score is fXcked up for next 7 years..

 

[wjones]

Thanks for all the advises. I'll close most of them and make sure it has ZERO balance.

 

[wjones]

Update: Finally closed most of the accounts. Here are a few that left.

1 Discover
2 Amex
1 MC
1 VISA
1 ATM check card/VISA

 

[RossMAN]

Originally posted by: wjones
Update: Finally closed most of the accounts. Here are a few that left.

1 Discover
2 Amex
1 MC
1 VISA
1 ATM check card/VISA

Good job.

Also make sure that the accounts you closed are confirmed in WRITING by the creditor.

For instance if you closed a Sears account, make sure you receive a signed letter on Sears letterhead confirming your account 656454644###### has been cancelled and is closed.

 

[manly]

Closing so many accounts at once can definitely hurt your credit score. Age of accounts weighs in on your FICO score, so if all of a sudden, your old accounts are now closed, your score would go down.

The sound advice is to preferentially close newer accounts.

I also have too many accounts, but in the end decided not to cancel any at this time. Instead, I've resolved to not open any more credit card accounts and to close one or two of the existing accounts if over time, that bank imposes onerous terms.

 

[wjones]

Good article: How canceling a store card affects your credit

Are specialty store and department store cards gathering dust in your wallet? Tempted to cancel all the accounts?

Before you do, consider the impact on your credit. Canceling a large amount of unused credit could actually hurt your credit score.

If you plan on applying for an auto loan or mortgage in the next few months, hold off on shutting down the cards.

Credit-scoring models look at a number of factors when calculating your score, including the result of the following formula: The total amount of debt on credit cards and revolving accounts divided by the total amount of debt available on those accounts.

This formula results in a fraction less than one. The lower the fraction the better. A score of one would mean your outstanding debt equals your available credit and you've maxed out your cards.

Let's look at an example.

Let's say you've got $5,000 of debt and $15,000 in credit lines. By dividing 5,000 by 15,000 you get one-third. You're using one-third of the credit available to you.

Now let's say you cancel an unused credit card with a $5,000 limit. You've still got $5,000 of debt but only $10,000 in credit lines. By dividing 5,000 by 10,000 you get one-half. You're now using one-half of the credit available to you.

The closer to one this fraction gets, the more it hurts your credit score.

The best advice for a home or auto shopper with credit card debt is to hang on to all those unused credit lines until after you've landed your loan.

Folks without a penny of credit card debt can cancel as many unused card accounts as they want. As long as their credit cards are balance-free, it won't hurt their credit score a bit.

If you're in credit trouble or if you had credit problems in the past and you know an unused store card is just going to tempt you to spend, then go ahead and close the account.

Yes, it may ding your credit score a bit. But if it will keep you from acquiring more debt, it's best to do it. You can worry about building up your credit score after you're back on your feet financially.

Here's one last tip: Only cancel store cards with empty credit lines. If your balance is anything but zero, you'll want to keep the account open until you pay it off. Some issuers may try to jack up your interest rate if you try to cancel an account when you maintain a balance.