Small CL and closing card how does it affect me?

[Skye12329]

So my Target Redcard is going to be 2 yrs old in December and it still have its initial $200 limit  I am currently thinking about closing it considering i dont ever use the card, actually thinking about closing all my store cards since i dont really use them. 1 at a time though.

I understand the history stays for 10 yrs. I was wondering though does it look bad to lenders? When applying. Also does it look bad that i have a $200 limit to lenders?

[chwebb1]

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@Skye12329 wrote:

So my Target Redcard is going to be 2 yrs old in December and it still have its initial $200 limit  I am currently thinking about closing it considering i dont ever use the card, actually thinking about closing all my store cards since i dont really use them. 1 at a time though.

I understand the history stays for 10 yrs. I was wondering though does it look bad to lenders? When applying. Also does it look bad that i have a $200 limit to lenders?

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It won't look bad to lenders. I closed 3 accounts in the span of around a month late last year (2013), and I didn't hear anything from any of my lenders, nor did I have issues being approved for anything afterwards. If the card isn't useful to you, nuke it. And to me, a card with a $200 limit is useless. Heck, sometimes my Barclaycards with $1k limits cause me issues (my BoA card with a $1k limit sees around $25-30/month in spending, so it's definitely not an issue).

[Skye12329]

Thanks also if i did keep it open would a $0 balance on it look bad or no? i doubt im going to keep it open as you stated and i have told target EO my limit is pointless and of course got the same periodic message back. 

[chwebb1]

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@Skye12329 wrote:

Thanks also if i did keep it open would a $0 balance on it look bad or no? i doubt im going to keep it open as you stated and i have told target EO my limit is pointless and of course got the same periodic message back. 

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A $0 balance actually is good for FICO scoring (as long as one account reports a balance). They MAY close the card if you don't use it for many months, but if you want them to keep it open, you could always just go to Target and buy a Pepsi or something on it every few months.

[Tony275]

I'd say close it! I'm doing the same with my low limit CCs

[takeshi74]

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@Skye12329 wrote:

Small CL and closing card how does it affect me?

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There's a sticky for this:
http://ficoforums.myfico.com/fico/board/message?board.id=creditcard&thread.id=117125&jump=true

Immediate impact is to utilization.  If the CL is small then the impact to utilization will probably be small.  You can always calculate utilization before and after closing to compare and help you in your decision making.

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@Skye12329 wrote:

Thanks also if i did keep it open would a $0 balance on it look bad or no? 

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Consider that the general advice to optimize utiization for scoring purposes is to allow only one balance report at 10% or less.  If 0 balances looked bad that advice would be useless.  You don't want 0 balances reporting across the board but a single 0 balance isn't an issue.

[MT936]

It wont really affect your utilization because the limit is so low. The only thing it would affect is your average age of credit but even then the card will stay on your report for 10 years so you can go ahead and close it.

[pizza1]

I got 7 store cards back in Decemeber while rebuilding(huge mistake I now know), then promptly closed them 2 months later.... All 7 of them! Never heard anything from my other lenders. In another yr, I'll probably close 4 more.