Has anyone closed multiple credit cards? Are there any consequences. I have several cards with what I consider very high limits that I don’t use or need and I’m thinking of closing a few. But I’ve read where this can result in lowering of my score. I don’t plan on purchasing a house and we are moving to one vehicle next year. Any suggestions or ideas.
Closing credit cards
- Thread starter Bflotomny
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ziggy29
Moderator Emeritus
Keeping them open unused doesn't hurt, but if you want to downsize your collection, I'd do it gradually, and usually starting with the youngest account first (unless you use it most because it gives the best rewards). In general, I'd focus on newer accounts, accounts with lower limits and cards that give no rewards (or the least rewards). I'd keep older accounts, accounts with higher limits and those with the best rewards programs.
In reality if you pay off each month and use 10% or less of your available credit each month, you're probably OK to just trim half of your credit limit and still have an excellent credit utilization ratio. That said, age of accounts matters so I'd be hesitant to close an account that was, say, 20+ years old.
In reality if you pay off each month and use 10% or less of your available credit each month, you're probably OK to just trim half of your credit limit and still have an excellent credit utilization ratio. That said, age of accounts matters so I'd be hesitant to close an account that was, say, 20+ years old.
I also want to close some cards. We have 5 right now. We have 3 new ones with good rewards (new meaning they've been open for about 3-4 months). The other 2 have been open for 10-15 years but have virtually no rewards.
We have 7 new credit checks related to the new credit cards and new cars. All of this has dropped our credit a good amount. In reality 2 credit cards is more than enough and we pay them off every month.
I know avg length of credit is used in the credit score but I dont know how much it factors in. If we close the 2 very old accts that have no rewards are we shooting ourselves in the foot? We could just keep them open and not use them but doesnt having too much available credit lines hurt also?
We have 7 new credit checks related to the new credit cards and new cars. All of this has dropped our credit a good amount. In reality 2 credit cards is more than enough and we pay them off every month.
I know avg length of credit is used in the credit score but I dont know how much it factors in. If we close the 2 very old accts that have no rewards are we shooting ourselves in the foot? We could just keep them open and not use them but doesnt having too much available credit lines hurt also?
Senator
Thinks s/he gets paid by the post
Your credit score will drop as you no longer have as much un-utilized credit. If they are old cards, it will even drop further.
Just shred them when you get them if you do not need them.
Just shred them when you get them if you do not need them.
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MasterBlaster
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Length of credit history counts as 15% of your credit score
Amount of outstanding loans counts as 30 % of your credit score
Payment history counts as 35% of your credit score
you can read all about it here:
FICO Credit Score Chart: How credit scores are calculated
calmloki
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
My understanding is that even a closed credit card account continues to be used in figuring your average age of accounts for a ten year period. I held off using any credit card accounts for decades as I view credit cards as usurious leeches on the productivity of a nation. Then I was given static about trying to rent a car, even though I offered a pocket full of cash for them to hold as security.
Since then I've used credit cards and make a point of being a credit card "deadbeat" - someone who never carries a balance or pays any fees. In fact, I have the card companies pay me. Now have a credit score of 815, utilization of 1%, oldest account 19y9mo, average account age 4y4mo, 29 accounts with 15 open, and three hard pulls in the last year.
I close card accounts that are about to charge an annual fee if they don't offer me a substantial inducement - like IHG mastercard offering a night stay in a Holiday Inn for paying the $49 annual card fee. Given that is a ~$120 value I can bring myself to keep the card. I do cull cards, and can see dumping more of them, even no annual fee cards, to simplify our Quicken accounts and reduce the chance of someone hacking into and using a long unused orphan card account.
Since then I've used credit cards and make a point of being a credit card "deadbeat" - someone who never carries a balance or pays any fees. In fact, I have the card companies pay me. Now have a credit score of 815, utilization of 1%, oldest account 19y9mo, average account age 4y4mo, 29 accounts with 15 open, and three hard pulls in the last year.
I close card accounts that are about to charge an annual fee if they don't offer me a substantial inducement - like IHG mastercard offering a night stay in a Holiday Inn for paying the $49 annual card fee. Given that is a ~$120 value I can bring myself to keep the card. I do cull cards, and can see dumping more of them, even no annual fee cards, to simplify our Quicken accounts and reduce the chance of someone hacking into and using a long unused orphan card account.
Sarah in SC
Moderator Emeritus
I'd try to hold off on dropping the oldest ones, if you have any interest in maintaining a high credit score. I have around 20-25 cards active at a time, and a fairly short history thanks to closing fee cards when I've wrung out the signing bonuses. My score is still high, but that's because credit utilization is very low, and of course payment history is perfect. If you have a lot of cards, closing one or two doesn't matter much, but if you already only have a few, it'll have a bigger impact.
Markola
Thinks s/he gets paid by the post
About 7 years ago, we went from an array of several confusing cards to just debit cards, one shared Amex and, for big temporary stuff like house moves and renovations, we've actively used an unsecured bank line of credit. Since then we've gotten 3 mortgages with no problems. Whatever our score is, it's categorized as excellent, which is all I care about rather than a particular number. If closing all those cards at once hurt us, I can't tell, except that finances are simpler.
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Sent from my iPad using Early Retirement Forum
Chuckanut
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I have been restructuring my CC's for over a year so as to have a good combination for travel and rewards. Overall, I am better off, but there are a few problems. The most recent problem is that after closing three CC accounts with poor reward potential and HIGH foreign fees, I opened two new cards to replace them. Then, when I went to open a third card I got a surprise. Closed 3, open 3, all even right? Wrong! I found out I had too many new accounts and hits on my credit report over the last two years. Despite an impeccable credit record, matched only by people such as those in this elite group, I was turned down.
Net result? Who cares. I don't need credit for anything I do. And the other CC companies will get the fees generated by my transaction.
Net result? Who cares. I don't need credit for anything I do. And the other CC companies will get the fees generated by my transaction.
FANOFJESUS
Thinks s/he gets paid by the post
For many years I only had one credit card my score was great. I miss those days I want to go back. I love to keep things simple. I have three now and want to close one or two. I think the more cards you have the easier it is to miss a payment. I have opened and closed many cards over the years and have not seen my score drop more than a dozen points. When I was young I got a dozen cards for the heck of it (22 years old) then closed them all in less than two years. The good news is I just threw them a drawer and did not use most of them. That was in the days before the internet but I can tell you my score was great when I did look it up.
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orangehairfella
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How good is your credit score and how much do you really care? The obsession with credit score really stops mattering once you're into the mid-700s, and when you're well over 800, its good for nothing but one-ups-manship at the pub.
If you've got great credit, and you don't want to deal with them, close them. You might be surprised how little it affects your credit, if its even worth caring about.
If you've got great credit, and you don't want to deal with them, close them. You might be surprised how little it affects your credit, if its even worth caring about.
Dog
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We have pared down to 3 CCs. I'd prefer to have just 2. One is used only for online purchases. We have a MC that is our primary CC and a Costco AMEX. All are paid off monthly. Our preference is to keep things simple and minimize debt. We have excellent credit.
I'm not sure why people have so many CCs?
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I'm not sure why people have so many CCs?
Sent from my iPhone using Early Retirement Forum
ziggy29
Moderator Emeritus
Good point. In reality, anything over about 750 is gravy. A short-term drop from, say, 820 to 800 is really meaningless in terms of whether or not one is offered credit, and in terms of receiving the best possible interest rate. What that means is that if I am OP and my score was in the 800s, I'd be less timid about canceling some accounts, though I'd still focus on the ones that were newer and had lower credit limits since canceling those will impact your credit score the least of all.
Sarah in SC
Moderator Emeritus
I do it for the airline and hotel miles, which we redeem on our travels. I'm a bit of a novice at it, but try to keep up with the best bonuses for the airlines and hotels we prefer. It is something I enjoy, and means we travel free most of the time.
My credit score was 810. I got 3 new credit cards. 2 of them for a small business venture. We leased a new car and bought a cargo van for the small business. All of that caused 7 hard credit checks. The 2 business credit cards have no interest for 1 year so even though the business can pay them off, they are close to maxed out.
My credit score dropped to 690. That's a big drop.
Even though 2 of the cards are close to maxed, my credit utilization was 25% which I would think is still pretty low compared to most people. I went ahead and paid off the 2 credit cards so my credit utilization should now be about 5% so Im curious as to how fast my credit will recover.
My credit score dropped to 690. That's a big drop.
Even though 2 of the cards are close to maxed, my credit utilization was 25% which I would think is still pretty low compared to most people. I went ahead and paid off the 2 credit cards so my credit utilization should now be about 5% so Im curious as to how fast my credit will recover.
Sarah in SC
Moderator Emeritus
Utrecht, you can check for free once a week on CreditKarma, if you have an account there. It doesn't usually change much but once a month, but they include Transunion and Experion on the site. Might be worth checking out.
ziggy29
Moderator Emeritus
Seven hard pulls for that? That doesn't seem right. I see five of them there. Anyway, I think these drop off in three years, so hopefully you'll have no need to apply for credit until that time.
I talked to a leasing company about leasing a car before eventually leasing from a dealer. Both show up on my report.
I also co-signed on a mortgage for my brother about a year ago. He has since refinanced in his name only. That credit check is on there also.
When I bought the cargo van, apparently somewhere in the fine print was a credit card that goes along with it. Ill never use the card because it sucks, but there's another credit check for that card. Im going to cancel that one if I can find the contact info. I think I cut the card up immediately.
I dont need anymore credit. That's for sure. But we will most likely be moving to a different rental house next year so they will be looking at our credit. Thats the only reason Im concerned at all.
It will be interesting to see how much my score rises next update when the credit card balances are paid off and I drop from 25% to about 5-6%
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littleb
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You might want to close them 6-8 months apart so the hit on your credit will be spread out. If you have some cards with no transactions for a year or two check with the cc company that issued them since they might have already closed them. It happened with me when I stopped charging on store cards.
We only have 2 credit cards that were issued over 20 years ago. Like many on here I like to keep things simple.
I like my 800+ gravy credit score. Off to the pub to brag.
We only have 2 credit cards that were issued over 20 years ago. Like many on here I like to keep things simple.
I like my 800+ gravy credit score. Off to the pub to brag.
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Having a good credit score also translates into a good insurance score. That helps you on the pricing and underwriting for home and auto insurance. Higher scores get better pricing. It is one of those things that doesn't predict how you drive or how many claims you might have but does predict accurately what a large population will experience as a group.
Bamaman
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
My wife had a 820 FICO score last time we checked--and she has any income. Go figure? Benefit? She gets offers for loans and credit cards almost daily--none of which are used.
We recently applied for and received Capital One's latest and greatest Visa that pays back 2%. It comes with 400,000 points if you charge/pay $3,000 in the first 90 days and a $30,000 unsecured credit limit.
When I went to start the card, it couldn't be done automatically on the phone. Capital One asked a number of multiple choice questions about a previous address over 10 years old and even my height. It sounded like they had an extra detailed CBR report and had even run a drivers license check to verify my identity.
When I worked in the finance industry, I had contacts with a large bank in our city. They had a number of retired FBI special agents working in credit card security. They also volunteered with the sheriff's department and were carrying sheriff's badges. And they had arrest powers. That tells you what a serious problem credit card fraud is--costing banks and finance companies $ billions per year.
We recently applied for and received Capital One's latest and greatest Visa that pays back 2%. It comes with 400,000 points if you charge/pay $3,000 in the first 90 days and a $30,000 unsecured credit limit.
When I went to start the card, it couldn't be done automatically on the phone. Capital One asked a number of multiple choice questions about a previous address over 10 years old and even my height. It sounded like they had an extra detailed CBR report and had even run a drivers license check to verify my identity.
When I worked in the finance industry, I had contacts with a large bank in our city. They had a number of retired FBI special agents working in credit card security. They also volunteered with the sheriff's department and were carrying sheriff's badges. And they had arrest powers. That tells you what a serious problem credit card fraud is--costing banks and finance companies $ billions per year.
I check my credit score frequently using the free tools through my cc companies (Barclay, discover, American express) and credit karma.
Since I've been monitoring its boggled my mind how much my credit score has moved around.
I've turned and burned far more credit than my wife yet her score is higher...but she does pay her balance in full, sometimes I carry a balance on 0% cards. It seems if you slowly pay down your debt, and slowly decrease your debt to available credit, the score jumps about 3pts a month. Throw in some hard inquiries and it can drop about 30-40pts. I usually open 2 credit cards at the same time. These 13 hard inquiries are killing me though...wont be able to open new accounts for a year and a half.
I just had my dad add me onto an old card of his with a high limit to see how that affects my score. IMO the easy way to add time. We'll see how it effects me.
Since I've been monitoring its boggled my mind how much my credit score has moved around.
I've turned and burned far more credit than my wife yet her score is higher...but she does pay her balance in full, sometimes I carry a balance on 0% cards. It seems if you slowly pay down your debt, and slowly decrease your debt to available credit, the score jumps about 3pts a month. Throw in some hard inquiries and it can drop about 30-40pts. I usually open 2 credit cards at the same time. These 13 hard inquiries are killing me though...wont be able to open new accounts for a year and a half.
I just had my dad add me onto an old card of his with a high limit to see how that affects my score. IMO the easy way to add time. We'll see how it effects me.
bamsphd
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If your old but undesirable card is with a major issuer, instead of closing the account you might be better off asking the issuer to change your card to one (or more) of their cards with better benefits. The benefits on new cards have been much better the last few years than they were a decade ago, so keep the "member since" date, but get the new benefits.
Sarah in SC
Moderator Emeritus
kgtest, you bring up an excellent point with getting added to an old account. I experimented with this for a friend, with two of my oldest cards, and his jumped about one hundred points from bad to very good. No risk to me, as I kept the cards, of course, and monitor the accounts religiously.
