Closing a secured credit card

[Anonymous]

I am wondering about closing a secured credit card.

Here is the situation:

I opened a secured credit card with a $300 limit to help build back up my credit. At the time I had no credit cards and a score in teh low 600's so I was ok with paying the 300 for the card. This card was opened 8 months ago.

Now I currently have fico scores around 760 for transunion and equifax and experian score of 730.

I have recently purchased a home, and have four other credit cards all with limits in the $2500-3000 range.

So, at this point this secured credit is totally worthless to me. Although the $300 I would get from closing the card would come in handy right now due to the new home purchase.

I am wondering how bad this would affect my credit.

I guess I really dont care if my scores drop for a while since I already have a newer car that's paid off, a home loan, and enough credit cards.

What do you guys think the best thing to do is?

[Shogun]

I'd say ditch it now.  It'll stay on for 10 years and add to AAoA.  You won't lose anything from the util with it being that low a CL.

[Anonymous]

I said screw-it and cancelled the card. It hasnt really been opened long anyway. They said it will take 10-14 days to get a check which is not too bad.

Hope it doesnt screw things up too bad, but then again I dont need to be applying for any more credit any time soon anyways!

[Anonymous]

It should have no effect on your credit score.

[HiLine]

The most important you would lose by closing your secured card is the credit history length, and it's a permanent loss. You'd have to make the judment on whether this loss would be offset by the aforementioned benefits. If you are in a situation where $300 in cash matters a lot, you may want to re-evaluate your financial plans; the $300 deposit is basically part of your checking account and emergency fund that you can tap into in cases of adverse events. If you're already feeling the need for it, make sure it's being used for the best purpose.

[Anonymous]

It is not the fact that $300 means a lot, the 300 is not really that big of a deal. That money will just help go towards extra pre-payment on my mortgage loan. It's not like I need the money to be able to pay my bills this month, I would rather not have the card if it is going to do me no good and I will never use it.  My thought was that I might as well cancel it now because of the short history rather than cancel once i have had it for a few years.

  I did in fact close the secured card, checked my experian report and it jumped up 6 points after it being cancelled.  I know that is not a true FICO scoring model, but I get the updates for free.

[HiLine]

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@AJC1987 wrote:

My thought was that I might as well cancel it now because of the short history rather than cancel once i have had it for a few years.

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You may have got it backward. The longer a card stays in your credit profile, the longer it's going to help your credit history length and AAoA. Say for example that you keep your card for the next 5 years, then cancel it. Then for 15 years you'll have a card dating back to the date you opened the card. If on the other hand you close the card now, you'll only have that old date for 10 years.