04-06-2011 11:23 PM
Hello, I have 2 store credit cards about a year old, one with a $800 limit and one with a $1500 limit, both have a 0 balance. I was wondering if I should close them? I have a regular credit card with a balance of $30 and $500 limit. Would it be a better idea to just let them go inactive or cancel them on my own?
04-07-2011 03:13 AM
If they do not have an annual fee, I would suggest keeping them open. Having a mix of cards helps your credit score - a store card is seen differently than a credit card - so it will help your score to have at least one.
04-07-2011 05:13 AM
The general rule is, unless their is an annual fee that you don't want, then there is absolutely no reason to close the account. It is helping you in many ways:
1. Positive account with no negatives.
2. $0 Balance open account
3. Helps utilization
4. Helps AAoA - even though it would still do this closed, it will be on your report indefinitely if you keep it open.
5. Gives you an extra 20-30 days to pay for something if you want.
Keep it open!
04-07-2011 07:57 AM
Store cards do not help you any more than any other credit cards as far as credit mix goes. There is no benefit in having a merchant (or store) card in and of itself.
However, store cards often stay open for extraordinarily long periods of time. When that happens, they are a significant boost to your AAofA and sometimes to your length of credit history. It is most often recommended to keep these types of cards open - if, as mentioned, they have no AF. Store cards often carry other benefits as well, such as discounts and advance notice of sales.
If it were me (and it's not), I would keep them open. Unless you have a horrendously large number of cards and just don't feel like messing with them.
Often folks want to clean up or tidy up their wallets and in so doing, close beneficial accounts. Another option is to sockdrawer your store cards and pull them out every 3-6 months for a purchase you would be making anyway. PIF and then pop it back in the sockdrawer.
04-07-2011 08:04 AM
Another issue to consider is your number of open revolving accounts.
Three is better than one - FICO looks at how many accounts are reporting a balance.
The consensus seems to be that one account reporting a balance is better than no accounts reporting a balance.
And that one account out of three reporting a balance is better than one account out of one reporting a balance (in other words, it's better to have 1/3 of your open accounts reporting a balance than 100% of your open accounts reporting a balance.
Hope that's helpful!
04-07-2011 02:06 PM
i would at least keep open the 1500 dollar one lenders judge you by the types of credit you have and what types of limits you have having a high limit shows that they can trust you with a high limit having low limits on cards count neg. towards you
04-07-2011 07:35 PM - edited 04-07-2011 07:35 PM
FICO does not frown upon low credit limits. You'll often see negative comments about low credit limits on FAKO websites; but ignore them.
FICO does look at utilization on your revolving accounts; and number of accounts carrying a balance. Do pay attention to those items.
And I like to bring up the fact that DH had a FICO score over 800 with only one open revolving account - it was an HSBC Orchard with a $500 CL.
As far as creditors looking at your CL's - DH's next card was Alliant CU with a $10,000 CL. That Orchard's baby CL did no damage whatsoever.