topic Re: Closing Credit Cards and Utilization in Credit Cards

Closing Credit Cards and Utilization

KRF — Fri, 07 Mar 2025 15:32:51 GMT

I know they say don't self-close credit cards and to just throw them in a sock drawer. I did this with my Dicover It card which I've had forever. I'm trying not to use credit cards. I didn't think to put a small amount on it every now and then, so Discover closed the card due to non-use. I don't want to reapply because I don't want anymore cards. My CL was 15k.

How does this impact my DTI? Will this negatively impact my credit score since it closed?

Thanks, friends.

Re: Closing Credit Cards and Utilization

Minimalist — Fri, 07 Mar 2025 16:02:56 GMT

@KRF wrote:
I know they say don't self-close credit cards and to just throw them in a sock drawer. I did this with my Dicover It card which I've had forever. I'm trying not to use credit cards. I didn't think to put a small amount on it every now and then, so Discover closed the card due to non-use. I don't want to reapply because I don't want anymore cards. My CL was 15k.

How does this impact my DTI? Will this negatively impact my credit score since it closed?

Thanks, friends.

That depends on a lot of factors, how many other cards do you have, what's your utilization? Generally the Discover should stay on credit for 10 years showing the history, by the time it's removed your other cards (if any) will have aged along with it and will still be active.

On the other hand, if you're not using credit cards, why not close them all (or all but one or two) and not worry about score?

Quite a bit of information missing here.

Re: Closing Credit Cards and Utilization

KRF — Fri, 07 Mar 2025 16:08:40 GMT

@Minimalist wrote:
@KRF wrote:
I know they say don't self-close credit cards and to just throw them in a sock drawer. I did this with my Dicover It card which I've had forever. I'm trying not to use credit cards. I didn't think to put a small amount on it every now and then, so Discover closed the card due to non-use. I don't want to reapply because I don't want anymore cards. My CL was 15k.

How does this impact my DTI? Will this negatively impact my credit score since it closed?

Thanks, friends.
That depends on a lot of factors, how many other cards do you have, what's your utilization? Generally the Discover should stay on credit for 10 years showing the history, by the time it's removed your other cards (if any) will have aged along with it and will still be active.

On the other hand, if you're not using credit cards, why not close them all (or all but one or two) and not worry about score?

Quite a bit of information missing here.

Sorry, I will add more information.

I don't want to use credit cards because of the situation I've gotten myself into.

I have high balances on my other cards. I just paid off my Chase which has my second largest CL.

CITI CC: 4.7k (0% until 01/26)
Wells Fargo CC: 8.8k (0% until 04/2025)
BofA CC: 5k (0% until 07/2025)
BofA CC: 2.8k (0% until 10/2025)
BofA CC: 11.3k (22.24% APR)
USAA CC: 5k (0% until 04/2026)

These are all pretty much maxed - hence why I do not want to use anymore cards. This obviously impacts my credit score (the high util) so that's why I was wondering about Discover closing and the effect it has.

Re: Closing Credit Cards and Utilization

Varsity_Lu — Fri, 07 Mar 2025 18:48:59 GMT

@KRF

Losing $15k of credit will definitely have a negative impact in your case since your denominator just got smaller and your numerator is pretty big. However, that part of your score (utilization) changes rapidly and has no memory from month to month. So, as long as you keep paying down your current charges and don't add any additional, your score will be headed in the right direction. And your score is only really important if you are applying for new credit or loans. In your case, you probably should do that, so the temporary dip in your score due to utilization won't matter much.

Re: Closing Credit Cards and Utilization

Varsity_Lu — Fri, 07 Mar 2025 18:50:55 GMT

@Minimalist

It will help for 10 years as far as age of accounts go, but the $15k of lost credit won't be calculated into his utilization will it?

Re: Closing Credit Cards and Utilization

Anonymous — Fri, 07 Mar 2025 19:03:15 GMT

DTI = Debt to Income
Only Debt or Income effects DTI

You are questioning "Utilization" (UTL/UTIL)
Your Total CL was $52600
Your Total CL is now $37600

Using 90% UTL on the cards you posted

Your aggregate utilization with the 15000 Discovery was
52600 CL = 64.33%

Your aggregate utilization without the 15000 Discovery is
37600 CL = 90%

Re: Closing Credit Cards and Utilization

KRF — Fri, 07 Mar 2025 19:03:52 GMT

@Varsity_Lu wrote:
@KRF

Losing $15k of credit will definitely have a negative impact in your case since your denominator just got smaller and your numerator is pretty big. However, that part of your score (utilization) changes rapidly and has no memory from month to month. So, as long as you keep paying down your current charges and don't add any additional, your score will be headed in the right direction. And your score is only really important if you are applying for new credit or loans. In your case, you probably should do that, so the temporary dip in your score due to utilization won't matter much.

I'm debating closing cards as I pay them off - just to curb getting myself in the same situation. I'm sure that will hurt me credit-score wise but like you said I won't be applying for anything anytime soon so I wonder if it's a worth-it sacrafice.

Re: Closing Credit Cards and Utilization

KRF — Fri, 07 Mar 2025 19:06:15 GMT

@Anonymous wrote:
DTI = Debt to Income
Only Debt or Income effects DTI
You are questioning "Utilization" (UTL/UTIL)
Your Total CL was $52600
Your Total CL is now $37600

Using 90% UTL on the cards you posted
Your aggregate utilization with the 15000 Discovery was
52600 CL = 64.33%

Your aggregate utilization without the 15000 Discovery is
37600 CL = 90%

Which in turn hurts my score, yes? Honestly kicking myself but at the same time.. I might just end up closing cards I pay off as I do not want to be in this situation again. Short-term pain for long-term gain.

Re: Closing Credit Cards and Utilization

Anonymous — Fri, 07 Mar 2025 19:16:59 GMT

As you pay them off, cut them in 3x3MM pieces to make a cool collage for your wall. (I.E. Don't use them)

If you close them as you pay them off you will keep your UTL high and your score down.

Re: Closing Credit Cards and Utilization

KRF — Fri, 07 Mar 2025 20:33:05 GMT

@Anonymous wrote:
As you pay them off, cut them in 3x3MM pieces to make a cool collage for your wall. (I.E. Don't use them)

If you close them as you pay them off you will keep your UTL high and your score down.

Thank you. Will do.

Re: Closing Credit Cards and Utilization

FlaDude — Fri, 07 Mar 2025 22:10:24 GMT

I would also avoid closing any that will help your overall utilization until you get your debt down. This can reduce the chances that lenders will "balance chase" (lower your limit to close to your balance each time you make a payment, effectively keeping your utilization percentange on that card at near 100%).

Re: Closing Credit Cards and Utilization

Varsity_Lu — Fri, 07 Mar 2025 22:27:50 GMT

@FlaDude wrote:
I would also avoid closing any that will help your overall utilization until you get your debt down. This can reduce the chances that lenders will "balance chase" (lower your limit to close to your balance each time you make a payment, effectively keeping your utilization percentange on that card at near 100%).

Agree. As long as the card doesn't have an annual fee, leave it open. You can cut up the card if it keeps you from using it, but keep the accounts open.

Re: Closing Credit Cards and Utilization

FicoMike0 — Fri, 07 Mar 2025 22:58:22 GMT

ditto @Varsity_Lu @FlaDude @Anonymous

Not entirely sure if your through with credit or just cards. If you want to keep credit options open, take their advice. If also pay all accounts to under 69% first, to avoid balance chasing.