Credit Cards

[YoungInvestor]

I have 11 open lines of credit and always thought it was bad to close a cc until I started reading this board. Today I called to cancel one of my newer cards (about 18 months old) but they told me that it would hurt my credit score and it's best to lower the credit limit to $1000, keeping the card active. I would like to do the best thing as I will be house hunting within a year or two. Thanks in advance and thank you to this great board..

[desifink]

Where on this board did you read that it's good to close a CC??? The only time it's good to close a CC is if you're paying crazy account fees. Otherwise, keep it open and use it every few months for a coffee or cheeseburger to keep it active, and pay right away to avoid interest. I wouldn't advise lowering your CL either - it counts toward your overall utilization ratio (available credit vs used credit).

[FretlessMayhem]

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desifink wrote:

Where on this board did you read that it's good to close a CC??? The only time it's good to close a CC is if you're paying crazy account fees. Otherwise, keep it open and use it every few months for a coffee or cheeseburger to keep it active, and pay right away to avoid interest. I wouldn't advise lowering your CL either - it counts toward your overall utilization ratio (available credit vs used credit).

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I agree. It sounds like you might have gotten some misinformation.

[caliborne]

Don't close or reduce your credit limit (but also don't charge up your card either) Unless it comes with a fee like someone said. It can hurt your score

When you go to get a mortgage if they think you have too much available credit you can deal with it then.

[ilovepizza]

Higher credit limits are your friend. Don't reduce. Increase. Higher limits help hold up scores. Low limits can look bad.

Canceling...
It depends on many factors. Rarely but yes somethings canceling a card can help you gain more credit, however it will not raise your score. Usual rule is never cancel a free card. But there are exceptions to this rule here and there since credit is more than just a score.

Who is the card from?
Does this card have fees?
What is your current credit score?
What other cards do you have?
How old are your other cards?
MOST IMPORTANT... What is the credit line?
What is your goal?

With this we can help determine if it would be advisable or effect you to cancel this or another card. Sometimes it doesn't matter either way and sometimes it might look better on a manual review. Most of the time it will work against you.

[FaircreditguyFL]

NEVER close a card or lower the limit while in the rebuilding stage - period. If the issuer CLD you, deal with it but NEVER close or lower the limit on your own. FICO could give a rat's bottom who issued you credit. Other lenders do. With that said, I would close a card after 2 years for failure to increase CL or a monstrous fee and no perks. I don't mind a fee for airline miles or companion tickets. Fees vs CL and perks is important. CreditOne has monthly fee and no perks... I'd drop like it's hot. Cap1 has fees associated with some cards... fee with low APR (for those who carry balances) I would keep. For me, it boils down to issuer of the card, CL, and perks.

[YoungInvestor]

All those who responded already, thanks. I believe I read that infomation either on this site or another reputable site.

Who is the card from?    Discover
Does this card have fees?   No I dont have any cards with fees
What is your current credit score?  @ 700-710
What other cards do you have?    citi mc, capitalone visa, random store cards, penfed
How old are your other cards?    oldest is @ 6-7yrs
MOST IMPORTANT... What is the credit line?    $7500 on the discover max is 9k, lowest is 3k
What is your goal?   close open lines of credit so i dont lose track of cards, could be more open to fraud, also to raise credit score... ensure timely payments on the 1 or 2 cards i will use.

Is it better to close store cards? Again, thanks and I appreciate the help.

[YoungInvestor]

Oh and I'm not in a rebuilding stage but did miss maybe 5 or 6 payments (because i had 4 cards i was using and forgot 1 here and there) over the course of the past 3 years. The capitalone dinged my credit and thats probably why im not 20-30 points higher...

[FaircreditguyFL]

Do you ever carry a balance? If no, you are good to go. If yes, closing an account will lower your credit score even more due to utilization. Suggestion: If you use a bill payer service from your bank, once you receive your bill, either electronically or USPS, set up the payment immediately for a date which coincides with your pay dates.

[ilovepizza]

Yea, I think this Discover is good for your credit. Discover has a AUTO pay option to take out the minimum payment from your checking account in case you forget. This is great to prevent lates. If it is fraud you will see the money deducted from your bank account to alert you there was activity on your Discover card. Then you can dispute... But I'd keep it forever at this point.

If you need to cancel a card I'd hit retail cards first. However they are great to leave in the sock drawer since if you don't shop there you don't have to worry about a balance on them. I wouldn't get another retail card.

But I really think long term this Discover card will hold up your score years from now.