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New Member
MishaMisha123
Posts: 4
Registered: ‎05-20-2007
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How & When To Close Revolving Accounts

I understand that closing revolving accounts may lower my FICO. I also understand that having too many revolving accounts may lower my FICO. It seems like this is a lose-lose situation. So what is the best way to handle closing accounts?  How do I go about closing accounts so they won't hurt me in the future, without hurting my score long term because I've closed accounts? I know I should keep the longest-held accounts, and accounts with the highest limits. How do I handle this? Should I just close maybe one every six months until I hit the average of 6 open accounts?
 
" You have too few/too many accounts being reported on your file
According to your credit file, you have 10 open credit obligations being reported as current on your credit file. On average, U.S. consumers have around 6 open and current credit accounts on their credit file.
Why does
this matter?
The score measures the number of accounts being reported on your credit file. Studies demonstrate that consumers with a moderate number of credit accounts appearing on their credit bureau report represent lower risk than consumers with either a relatively large number of credit accounts or a very limited number of credit accounts. The bottom line A good rule to follow: Avoid applying for credit you don't need, or don't intend to use. (By the way, closing an existing account doesn't make it disappear from your credit report immediately. So closing many or all of your accounts isn't likely to increase the score.) The best way to improve your credit rating is by managing all of your accounts responsibly, and doing your best to make all your payments on time."
Established Contributor
Revike
Posts: 720
Registered: ‎05-04-2007
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Re: How & When To Close Revolving Accounts

Where does that quote "You have too few/too many ..." come from? It is obviously a generic comment. From posts in this and other forums, it seems that having a larger number of revolving accounts has little or no effect on the FICO score, as long as the accounts are handled responsibly (no lates, low utilization, etc.).

The only reasons I would close an account would be if it carried an annual or monthly fee, or if it was an unnecessary account with a very low credit limit and a very young history (so that closing it would increase your average account age) ...
New Member
MishaMisha123
Posts: 4
Registered: ‎05-20-2007
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Re: How & When To Close Revolving Accounts

The quote listed in the original post is from the Suze Orman FICO Kit. This one in particular is from TransUnion.
Established Contributor
Revike
Posts: 720
Registered: ‎05-04-2007
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Re: How & When To Close Revolving Accounts

From another thread on the same subject ...


Skiffy wrote:
I have 23 open credit card accounts, and I know people with many more than that. The number of accounts isn't what hurts, it's how many there's balances on, the balances as a percentage of your total limit, and, of course, age.

I wouldn't keep open an account you're not using if there were an annual fee. However, if there is no fee, I don't see a reason to close it. Just use it every 2-3 months to keep it active and reporting (and pay it in full).

Super Contributor
MidnightVoice
Posts: 8,161
Registered: ‎03-25-2007
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Re: How & When To Close Revolving Accounts

You could always pay off and cut up most of them and throw the pieces away.
 
Then you get credit for having credit but no balances to make your utilization too high
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
New Member
MishaMisha123
Posts: 4
Registered: ‎05-20-2007
0

Re: How & When To Close Revolving Accounts

Thanks!
Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007
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Re: How & When To Close Revolving Accounts

[ Edited ]
I have 11 credit cards and I was about to add 7 or 8 more. My score actually went up when I added the last one. Odd. Said new account and gave me some points. Usually you are hit for accounts with balances. Only use up to 4 at a time while the others are $0. I was unaware having too many cards was a problem. Wait... What is your total "age" of all cards combined. That may have something to do with it. Mine is 7 years for an average. Average being dates opened. I've always capped my self around 20 credit cards. I think average age is the key not number of cards. I am getting more now, so I will probably see that message pop up. I did not have it in the past when I had all old cards. But I am not sure on this one. Anyone else please comment.

Message Edited by ilovepizza on 05-21-2007 05:40 PM
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc

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