Should I Cancel Idle Credit Cards?

Ask Savvy: Should I Cancel Idle Credit Cards?


Dear Savvy,
I recently bought a condo and to buy my furniture did one of those no payments no finance for furniture. Obviously paying off quickly. I'm wondering if I should then immediately cancel the credit card? I'm not planning to use it again. I also have a store card that i never ever use. My question is I've heard conflicting advice that if you cancel the cards it lowers your credit score. Obviously at the moment am not purchasing a home but want to maintain to credit score I have.

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A: Wait until there's a zero balance on both cards and then cancel them; you need to keep the credit lines open until the accounts are paid off. Because you just bought a condo, I'm assuming that you have other older credit cards that will serve as your credit history. After the balances are down to zero, call the issuers and ask them to cancel the cards with a note to the credit bureaus that the account was "closed at customer's request." Make sure you take notes of when you called and the name of the customer service representative.

All of the conflicting advice about closing accounts is enough to make my head spin. It's true that canceling a large amount of unused credit could actually hurt your credit score, so if you're shopping for a car or a home wait until you've secured a loan before you close any credit lines. Credit cards help build a credit history, but having too many can hurt it. Even having a drawer full of cards at a zero balance could push your score down.

The most important point in considering closing a card? If it has a long track record of you've made the payments on time, you'd be losing that good piece of credit out of your score. Keep the few cards that you've had the longest because lenders see these accounts as a sign that you're mature and creditworthy. Time really is an important consideration with credit cards — fifteen percent of your credit score is based on how long you've been using credit.

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