cancel of credit card

[Anonymous]

I am thinking of cancelling my HBSC card because I have two others and I can't see the advantage of paying $79 a year to have this card.  I don't really need it but I was told that it lowers your score to cancel a card.  Is this true?  I have 3 cards and one is a business account that doesn't appear to show up on my personal credit report.  Those cards plus a home loan and car are all I have on credit.

[haulingthescoreup]

Please read this:

Closing Credit Cards

Also, please read these to get an overall view of how credit and credit scoring work. There's a lot of bad info flying around out there:

Credit Scoring 101 (at least the first post)

Understanding Your FICO Score

Closing a card doesn't necessarily hurt. It depends on your total available credit, with and without the card, and your total balances due, again with and without the card. The closed card should remain on your reports for 10 years after closing.

With a fee card, if you decide to close, it's good to time it for the month before the fee is due again. Make sure that the balance is $0, and that you print out and save a statement or online activity report showing this $0 balance.

[Anonymous]

I think it is a myth that closing a card lowers your score. I was told it stays on your report for another ten years as a positive TL. Hopefully by the time it falls off you have other cards that have a long history.

Now, say this was your oldest card, and you close it, and don't open a new tradeline (CC) for ten years, then yes, the average age could suffer.

[jmbfl]

It is not a myth. Closing a credit card:

1) Will eventually effect your average age of accounts (AAoA), and

2) May eventually effect your oldest account, and, most importantly,

3) Will remove the CL for the TL from your UTIL calculation as soon as any balance reporting on the TL is paid off.

Always better to measure twice and cut once when considering closing an account. Of course other economic factors may weigh in favor of taking a FICO hit in order to save money.

Message Edited by jmbfl on 12-19-2008 03:35 AM