I just paid off our credit card, and it is one through a credit union we had when we lived in another state, so we will not (hopefully) be using it anymore. I hear conflicting answers to whether or not closing a CC will hurt your credit or not. I closed 2 down about 4 years ago and it affected my credit, however, my dad just closed several and nothing changed...When you pay off a CC and no longer want it, do you keep it open or close it? I am leaning towards keeping it open.
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I think we'll be keeping ours. I don't want anything to "hurt" our credit right now since we're trying to build it back. I figure we'll freeze them so that IF we do need them they're there but inconvenient enough to use that we wouldn't use them if not necessary. Maybe later down the road we'll close them.
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There are so many variables that could impact your credit rating and what impact any one action would have on your rating. Your dad probably has a considerably longer (and more diverse) credit history than you which could allow him greater flexibility in closing accounts without it impacting his rating. Chances are, you should probably leave the account open (with a zero balance). But it's really hard to know for sure with limited data points.
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How long have you had the card open?
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@MsLipGloss: yeah I am thinking since my dad is much older (obviously), he has more flexibility like you said. I know my credit score is good (above 760), but since I am only 23 this may have a lot to do with it. I have no idea lol...
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@Thehistoryofus: Only about a year and a half
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I left my old CCs open when I was done with them, primarily because I heard it could hurt your credit, but also because I figured it'd be nice to have an 'empty' card for emergencies. I know one thing I've seen on our credit reports/when we got our mortgage was the credit 'ratio' so, the ratio of total credit you have open to the amount you are actually using. The 'better' that is (i.e. the less you are using) the better that part of your score would be. So closing an account would make the bigger number of total credit smaller, and therefore give you a 'worse' ratio. Hope that made sense lol.
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@Bao: Do you have an older card? I read that you should keep your oldest card to show a long credit history.
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@Bao: You credit score isn't really a reflection of your age. It has to do with how long you've had account(s) open, the amount of credit you have, the amount you use, on time payments, etc. If the card you just paid off has been open for a significant amount of time, I wouldn't close it. Keep it open and either don't use it or use it within reason. Very rarely is closing the account a better option.
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i only have one CC and paid it off recently. i decided to keep it open "just in case" and i also trust myself not to rack it up again (especially since I am actually making money now and not a student)
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@Bookworm: that makes complete sense!
@Thehistoryofus: I personally do not, but this was a joint card between DH and I and he has 2 others from several years ago with a zero balance.
@LindsayInNYC: ok that makes sense too, I guess it doesn't hurt to leave it open but tuck it away somewhere. -
I heard you should keep it open and just cut up the card if you don't ever want to use it.
From what I understand, your credit score is partly based on the debt to credit limit ratio. Of all your credit cards, you might have $2000 worth of combined debt but your total combined credit limit is $10k. If you close that one account, your debt percentage goes up because you now have $2k of debt over $8k now. This example is based off of a CC with 2k limit.
I would keep it open. Also, didn't you recently buy a house? I wouldn't want to do anything that would affect my credit.
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@bluestriped bee: Yes we are closing on it soon, so good point. I wouldn't have closed it until afterwards anyway but I think I am just going to keep it open, the example you gave was great!
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I have always heard to keep them open.
Whatever you do though, DO NOT close it till after you close on the house!!
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@Bao: Even if you cut it up, you can always call and request a new card if you need one down the road!
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@Smurfette: No way!
@LindsayInNYC: This is true! -
@Bao: Totally sucks that you can't do anything before closing. We went on a huge shopping spree right after closing. When are you closing?
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@Bao: yeah, when we were house hunting, my realtor was really adamant about making sure our credit score remained stable. Or at least went up instead of down. I remember reading somewhere of a couple who ended up not closing on their house because they opened a new CC at a furniture store. The home buying process is so scary and sensitibe.
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@Smurfette: We are supposed to close February 28th. We have been a one car family for a few weeks now because we haven't closed yet, it's been manageable but still sucks we can't even do much at this point.
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@bluestriped bee: Oh crap that would really suck
Yeah our mortgage lender and realtor both told us to do absolutely nothing until after closing. It's all for a good cause though.
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@Bao: Just a little over a week now. Fingers crossed for you!
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@Smurfette: Thanks!!
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I just kept them open. I think it depends on your debt to credit ratio so maybe you dad's cards didn't effect that much. I'd probably just leave them open and tuck them away.
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Open! Your score is affected by length of accounts lifespan and also debt to credit ratio. Even though we pay off in ill each month we regularly request credit increases because it make our ratio better when were spending the same amount but have more credit we could use.
Yeah our mortgage lender and realtor both told us to do absolutely nothing until after closing. It's all for a good cause though.
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