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CLOSING CREDIT CARD ACCOUNTS

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Anonymous
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CLOSING CREDIT CARD ACCOUNTS

Is there a right or wrong way to close a credit line or credit/charge card account?  Recently PAID OFF the majority of the credit line(s) or credit/charge card(s) that had balances on them; the credit limits on these credit line(s) or credit/charge card(s) are nominal (less than $3000/per card).  I also paid off a personal secured loan early in an effort to improve my credit score(s).  Over the past several years, I have never been past due on any of these accounts, nor have I had any late payments. 

 

  I intend to keep only three credit line(s) or credit/charge card(s) open, in addition to our mortgage and a car loan. I am trying to improve my (and my husband's) credit score(s) prior to financing a portion of the purchase of a new car.   Any ideas, comments? 

 

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milkshakes
Regular Contributor

Re: CLOSING CREDIT CARD ACCOUNTS

3 lines of credit (credit / charge cards) is fine

 

 

there's no right / wrong way to close a card, really, but if you do close a card of the same institutiton (i.e. a Chase card when you plan on keeping a Chase card), it might be worth calling and trying to transfer the credit limit to the other card. this is what happens to your credit score when you close a credit card

 

+ gain peace of mind as it's easier to manage less cards

- in 10 years, your score will drop because your card will disappear from reports and your "average age of accounts" will most likely drop (no short term effect)

- in the immediate term, your "credit card utilization" (basically means how much of your available credit you're actually losing) rises because you're losing available credit, so your score will drop.

 

not sure, but paying off your personal secured loan early might actually have a negative impact on your scores. i paid my loans off early under the same logic and my scores dropped slightly after a few months. it eems the score wants to know how you're actively managing credit, so past credit responsibility (i.e. those paid off loans) aren't taken into consideration as much. i could totally be wrong though and that drop could have come from somewhere else

      
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