What I was taught is apparently wrong

[Anonymous]

21 year old here who is obsessive about his credit and wants to make sure he starts down the correct path. First time checking credit: TU - 685 EQ - 665 EX - 695 My parents both beat into me from age 15 that I should close out my credit cards if I am not using them and only keep a max of two open. I've been doing a lot of reading around the forums and have found out, to my surprise, that this is hurting my FICO score. I'm guessing the reason you want more credit cards open is due to the algorithm, can someone confirm/deny this for me. The biggest dents on my FICO are from lack of credit history, high inquires, and bad ratio. But the ratio is due to deferred Stafford Loans. Just wanted to drop a "hi" to everyone. Any 1 liners of help would be appreciated.

[Anonymous]

You don't want to close credit cards for the exact 2 reasons you are getting bad makrs for lack of credit history and high debt ratio.

The more open cards that stay open increases your average age of accounts.  And the more available credit you have affects your utility on your report.

Installment loans don't have that much impact on your credit report.  If you have a lot of debt on your revolving accounts that is what hurts.

[Anonymous]

And on top of this, CC (as long as left open) will continue to age indefinitely (unlike an installment account which always has a death date).

By keeping the accounts open for a long time, whenever you add a new installment account (or mortgage) it will have less of an affect on your average age of accounts.

Because they are closed, they will fall of your credit report 10 years later, and therefore decreasing your average age and thus negatively affecting your FICO. If you closed them recently, chances are you might be able to reactivate the old account...

Best off, at least you are young and striving for a perfect credit now... I'd love for you to post your FICO in another 10 years! :-)

[Anonymous]

My utilization on my credit cards is less than 15 percent.  I closed those accounts out months ago.  Do you think it would be worth it, to apply for new cards, or would the new credit hurt my account more?

[Anonymous]

Welcome to the forums!

If the accounts charged an annual fee then it is worth closing them if you can't get the fee waived, if not then it is best to keep accounts open and just charge a small item every 3 months or so. You can even pay it off before the statement date comes due to control the number of cards reporting a balance.

Some companies will let you reopen a closed account if you call them up and ask them about it. Your scores are decent for someone with new credit so I don't think its necessary, but it is one route you can go down.

Choose your next card carefully, pick up a prime one you with rewards you will be happy to use for a long time.

[haulingthescoreup]

Carry one or two rewards cards, but have two or three others in a drawer somewhere. To keep them alive, you can assign each one a recurring monthly bill or donation to pay, and have online automatic bill pay to pay the card balance. That way, you're not buying more stuff than you normally would; you're just running something through the card.

Think of cards in the sock drawer like this as investments. They're just there in the background, humming along, helping your overall money matters.

When you only have two cards, if you don't pay them off before their statements drop, it will look like you're carrying high balances and using "too many cards." (too many = both)

I have a card that I'm annoyed at that I don't want to close until next March. USAA has an EX monitoring service that costs a whopping $5.50/ month. I put this service on my annoying card, and this keeps it alive. Until I decide to kill it off.