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| *Ostroff, Fair and Company>>>Credit |
Is it better for your credit score to cancel a credit card that is not being used? Or leave it open? |
I have heard that it is good to have a lot of credit available and to only be using a small portion of that available credit. If you cancel your credit cards it makes it look like you are closer to maxing out your limits. On the other hand, if you have a lot of open lines and the ability to take on a lot more debt, that fact could also make lenders uneasy. One of the largest components of your FICO score is the percentage of available credit that you have used, both in total of all accounts and on each account. Closing unused accounts is typically NOT good for your score because you will automatically and unnecessarily reduce the overall amount of credit available to you. For example, let's say you have 4 accounts with credit lines of $10,000 each and you owe a balance of $2,500 on three of them. You owe $7,500 total against available credit of $40,000 or 18.75%. However, if you close the unused account, you now owe $7,500 against available credit of $30,000 or 25% and that could impact your score for the worse. The recommendations FICO normally publishes are that you should never use more than 30% of any particular account or 25% of your total credit available. Always pay your accounts on time and maintain those limits and you will enjoy a high credit score. Good luck! Source(s): Jerry Justice http://www.jpinvestmentholdings.com... The lender will look at the variety of your credit lines. Credit cards are only one source. Two should be your max. An open one unused is opening you up to vulnerabilities, such as using it unnecessarily and starting a huge bill. It is never good for your score to cancel a credit card. The best thing to do is buy some small things with this credit card, then pay it off the next month, AS SOON AS you get your invoice. Paying off your debt on time is the single best way to improve your credit score. Good luck! who cares if its good for your credit, if you don't need them cancel them or you will get pulled back in debt. i paid off all my credit cards and canceled every one, the best thing i ever did. financial freedom is no bills. then you don't even need credit unless you buy a house. One of the things that makes up good credit is CREDIT LENGHT; as long as this is not the oldest credit card you have on your credit, go ahead and close it, if you don't use it. If you close your oldest credit card, you'll be shutting down part of your credit lenght...think about it. |
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