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Super Contributor
Posts: 6,026
Registered: ‎09-18-2007
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Why Closing Credit Card bad?

Besides making the available credit less what other effect does closing a card have on the scores? I have 4 cards around $1K cl. I am thinking of combining them into one and close three cards. Since this does not reduce my available credit what other negative effect would I have doing this? I dont want to keep too many cards with small limits.

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Epic Contributor
Posts: 28,098
Registered: ‎04-01-2007
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Re: Why Closing Credit Card bad?

Well, I don't think that it would affect you, as you have boocoodles cards, but one oddball effect would be to reduce the number of open revolving accounts.

Since one occasional ding we see is "too many accounts with balances", if someone has several open installment accounts (which always have balances by definition) and only a few revolving accounts, it can be tough to have fewer than 50% of all open accounts showing balances.

So again, you're OK, but if someone only has 4-5 CC's, an auto loan, a HELOC, and a mortgage, and they're thinking of closing a couple cards, it could bite them back.

Otherwise, any damage wouldn't occur until the closed account fell off in ten years, or sooner if EQ messes up.

For anyone else reading this, please check out fused's "Closing Credit Cards", linked down in my siggy.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Super Contributor
Posts: 6,026
Registered: ‎09-18-2007
0

Re: Why Closing Credit Card bad?

Thanks Hauling. I have at least 8 store cards and even after closing these 3  major cards I would have another 7 Major Credit Cards.

 

I want to close Hooters $1400 AF 36 / HSBC $1500 CL AF 35 / HSBC $450 AF 59 / HSBC Discover $1000 CL NO AF. I want to see if I can combine all 3 hsbc cards into one and then ask hooters to waive the AF and if they refuse to waive AF then close hooters card.

 

I have no heloc or mortgage. I have one open car loan installment account. I always do PIF and do not carry balance. I think I would be ok.

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