Credit Score Question

Just wondering as far as your credit rating goes....

I have several credit cards, most which I hardly use and pay off right away. Will canceling them hurt or help my credit score?

If I have credit cards, will using them and paying them off right way improve my credit score or hurt it?

I think if you cancel them and have less outstanding credit, it helps your score...
Paying them on time helps as well and late fees all hurt your score.

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Posted by dkwife

I think if you cancel them and have less outstanding credit, it helps your score...

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MYTH!

When you open the credit card... damage is already done. I don't know why people believe this.


Linky

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Myth: Canceling unused credit cards, thus reducing the amount of available credit, will boost your score.

Reality: Canceling cards could hurt your score for two significant reasons.

One component of your score calculates a ratio based on how much you've borrowed versus how much credit you have available. The lower this ratio, the higher the score. Translation: If you have 10 credit cards with an aggregate credit limit of $10,000, but have an outstanding balance of just $1,000, your ratio is just 0.10, which gives you a relatively high score in this area. On the other hand, if you have borrowed $1,000 on one card with a total credit limit of $1,000, your ratio is 1. That gives you a miserable score, Watts says.

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Very interesting... I have been cancelling credit cards lately hoping to increase my score! oh, and spend less

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Posted by dkwife

I think if you cancel them and have less outstanding credit, it helps your score...
Paying them on time helps as well and late fees all hurt your score.

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You want to keep older credit cards open. When calculating credit score the length of time you have had credit is also a deciding factor.

You should not keep to many cards open. The more open credit you have can hurt your score.

I would keep one or two open and keep a recurring balance so it shows you can pay them off.

I know my credit history has been improving.

I know pay off my whole credit card balance when it comes in not the minimum.

I've noticed my credit amount keeps going up and my history gets better.

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Posted by KarenK122

You should not keep to many cards open. The more open credit you have can hurt your score.

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Again... this is misguided advice. Did you read the link I posted above?

The better piece of advice is to not open the cards in the first place. Don't be tempted to get those store credit cards for a measley 10% off your first purchase.

Once the accounts are open... the damage to your credit score is already done. Closing them does not improve your credit score.. and it could actually make it worse.

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Posted by DjPiLL

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Posted by KarenK122

You should not keep to many cards open. The more open credit you have can hurt your score.

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Again... this is misguided advice. Did you read the link I posted above?

The better piece of advice is to not open the cards in the first place. Don't be tempted to get those store credit cards for a measley 10% off your first purchase.

Once the accounts are open... the damage to your credit score is already done. Closing them does not improve your credit score.. and it could actually make it worse.

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First off the link doesn't work. Secondly, one is better off closing out high interest rate cards (especially store ones) than keeping them with the potential for high debt. Yes it's better to never have opened them but if they are already open it would be a smart move to clean up #1 the amount of cards you have and #2 the amount of potential debt you can accumulate.

Financial institutions look at not only the # of credit cards and the potential amount you could borrow from them, but they look at your payment history, your salary, your spouses hsitory. There are so many factors it's not just one thing.
And just because you open a card doesn't mean you automatically and forever ruin your credit.

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Posted by Jan05Bride

First off the link doesn't work. Secondly, one is better off closing out high interest rate cards (especially store ones) than keeping them with the potential for high debt. Yes it's better to never have opened them but if they are already open it would be a smart move to clean up #1 the amount of cards you have and #2 the amount of potential debt you can accumulate.

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Ok... since you can't open the link... how bout i'll quote passages from MANY articles on the MYTH of this subject.


From quicken.com

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MYTH: Closing accounts will not hurt your credit score.
FACT: It's not the closing of accounts that affects your credit score, it's opening them. Each time you apply for new credit and that company checks your report, an inquiry is added to your credit file. Too many inquiries can be seen as an indication that you have had trouble getting new credit or could be overextending yourself. Accounts that are older show your established history with credit, so think twice before you close these accounts.

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From kvbc.com

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'T think it's good for you close accounts that you don't use. So would that be true?'

This may come as a shock, but it won't. It's better to have more cards used responsibly than just one that is out of control. And there's more. 'If you have a really old credit relationship, it's good to keep that credit relationship alive because it demonstrates that you've had a long a successful credit history.'

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From Ryan Sjoblad of myfico.com

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'Closing an account will never help your score,' says Ryan Sjoblad, public relations manager for Fair Isaac's online service www.myfico.com. 'More than likely, it will hurt your score. You're closing the door on credit history.'

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from techuncovered.com

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Having more credit cards doesn't necessarily damage your credit score. In fact, it can actually improve it, as long as you don't apply for lots of cards in one shot (that generates too many credit enquiries) and you keep the total available credit to a reasonable amount.
Think carefully before you cancel old credit cards. Even if you don't plan to use them, keeping them active by charging the price of a coffee once a month will actually help your credit score.
Think before you consolidate your spending on to a single credit card. Doing so could raise the proportion of available credit you are using. Instead, try to make sure that the available credit you have is far greater than the amount you bill to your credit card each month.

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Let me know if you want to see more articles. Won't be hard for me to find more links.