topic Re: Should I close my cards? in Credit Cards

Should I close my cards?

kd081708 — Thu, 13 Mar 2014 23:26:30 GMT

I have two store cards, express and jcrew. Express was opened in january and Jcrew was opened in february. The both are PIF. But since then, i have gotten three unsecured cards so Im wondering because they are so new should I close them? or should I keep them and let them report 0? which is better for my score?

Re: Should I close my cards?

Kenny — Thu, 13 Mar 2014 23:29:48 GMT

Keeping them isn't a bad idea. However, closing them won't hurt you, they'll stay on your report for about 10 years. It might be worth it for you to keep them and just keep getting soft pull CLIs. Keeping them open might help you have less dramatic swings in utilization percentage.

Either way, it is neither bad nor good.

Re: Should I close my cards?

pdog661 — Thu, 13 Mar 2014 23:33:33 GMT

They are new trend lines. New trendlines will damage your score in the beginning. The hard pull will drop your score, and the new account will lower your average age of account.

Closing the accounts will not change these factors, and the accounts will remain on your report for 10 years. They will just change to report to "closed."

The main effect on a credit score from closing cards is your Utilization rate. Your utliziation is composed by dividing your current debt on your credit cards by the total available credit limits on the cards. Closed credit card accounts do not factor into this ratio. So if you are carrying balances on other cards by closing accounts your utlization will increase.

Re: Should I close my cards?

gdale6 — Thu, 13 Mar 2014 23:58:07 GMT

This would not be advisable, opening & closing in such quick fashion is a negative from an underwriters perspective. You will get the best benefit from them if you let them stay open and report a minimum of 2 yrs worth of history prior to close.

Re: Should I close my cards?

Anonymous — Fri, 14 Mar 2014 00:00:44 GMT

@gdale6 wrote:
This would not be advisable, opening & closing in such quick fashion is a negative from an underwriters perspective. You will get the best benefit from them if you let them stay open and report a minimum of 2 yrs worth of history prior to close.

Re: Should I close my cards?

red259 — Fri, 14 Mar 2014 00:23:25 GMT

@kd081708 wrote:
I have two store cards, express and jcrew. Express was opened in january and Jcrew was opened in february. The both are PIF. But since then, i have gotten three unsecured cards so Im wondering because they are so new should I close them? or should I keep them and let them report 0? which is better for my score?

Since they are new TLs I would keep them open and just SD them. I don't think it looks that great to open accounts and then close them shortly thereafter. They are not hurting anything and you can close them out in a year or two and they will add to overall util. If you close them out its not the end of the world as they will still remain on your report for 10 years.

Re: Should I close my cards?

kd081708 — Fri, 14 Mar 2014 00:29:22 GMT

@KennyS2006 wrote:
Keeping them isn't a bad idea. However, closing them won't hurt you, they'll stay on your report for about 10 years. It might be worth it for you to keep them and just keep getting soft pull CLIs. Keeping them open might help you have less dramatic swings in utilization percentage.

Either way, it is neither bad nor good.

Thanks for giving me something to think about. I thought one would be better than the other but I guess not.

Re: Should I close my cards?

kd081708 — Fri, 14 Mar 2014 00:30:19 GMT

Great info! I didnt even think about the affect on my utilization. I may carry balances at time on my unsecured card so it sounds like it would be better to keep them open.

Re: Should I close my cards?

kd081708 — Fri, 14 Mar 2014 00:31:13 GMT

Wouldnt it hurt more if I closed them 1 or 2 years from versus now? I think im going to keep them open but Im just curious....

Re: Should I close my cards?

red259 — Fri, 14 Mar 2014 01:45:19 GMT

@kd081708 wrote:
Wouldnt it hurt more if I closed them 1 or 2 years from versus now? I think im going to keep them open but Im just curious....

No will be same effect, although in 1 or 2 years you may have more overall credit so you will be less likely to benefit from store credit lines.

Re: Should I close my cards?

Rhaeny — Fri, 14 Mar 2014 02:12:39 GMT

@kd081708 wrote:
Wouldnt it hurt more if I closed them 1 or 2 years from versus now? I think im going to keep them open but Im just curious....

I would just keep them open if for both AAoA and utilization purposes. You may not believe that it plays a role now, but 10 years from now when those accounts start falling off you might wish you hadn't closed them.

I say this because I fell into that fiasco just recently. I had accounts that fell off and dropped my AAoA from 5.2 years to 2.9 years and that came with a huge drop in scores. Had I just held on to those cards instead of following the idea that I didn't need them anymore, I wouldn't have this issue. However that was long before I found this forum so I forgive myslef .

Re: Should I close my cards?

takeshi74 — Fri, 14 Mar 2014 12:56:06 GMT

Don't overlook the Helpful Threads sticky. This is linked in it:

http://ficoforums.myfico.com/t5/Credit-Cards/Closing-Credit-Cards/m-p/347190?jump=true

And also consider all the usual factors that go into scoring.

@kd081708 wrote:
Wouldnt it hurt more if I closed them 1 or 2 years from versus now? I think im going to keep them open but Im just curious....

Nope. The stuff posted prior to your post that I quoted still applies and the date of closure doesn't really change anything. You can try to consider where will be in 10 years after closure but that's probably a pointless endeavor.