Hello everyone, I need some expert advice. I was thinking about closing 2 of my credit card one is secured Capital One and the other one is First Premier unsecured. Thinking of closing them after we get our house. I have both of my cards for almost 10 years now. I was wondering what will be the effect towards my credit score if I did close them? Thank you in advance.
It will likely drop your score, since your available credit will be reduced. However, purchasing a house will also drop your score at first, with the mortgage and your debt to income ratio. It will go back up.
First question is do you have other credit cards (not store cards) in addition to the 2 cards you are considering closing? If yes, then close the accounts after you close on house. As @KellyFromKeene stated your credit score will dip slightly with the new mortgage and if you close cards at after closing on the house - you will minimize the dip as debt to income ratio will be less as you will not have access to as much debt without those 2 cards.
From everything I have read, it is recommended NOT to close credit card accounts. The primary reasons that this affects your credit score negatively are:
• you will have a shorter credit card history
• you will have less available credit
@Shannon H no I don't have other cards that I'm considering closing. Just those two. What if I close one of my store card too is that gonna have a different effect? Thank you.
@Ana24 is there a specific reason you want to close those cards?
The reason I ask is that the fact that you've had the cards for 10 years will contribute to your credit history, which is a factor in your credit score. Additionally, holding onto the cards but not having a balance increases your credit utilization ratio, which is another factor in your credit score. That's two reasons to keep them. Can you simply put the cards in a (secure) drawer if you're afraid of the temptation? That's my argument for keeping them.
However, if you are afraid you'll use the cards again, the lack of debt might provide you greater peace of mind than a higher credit score — but that has to be your call.
Will all I know and have read; it would be a great idea to keep them. Since you have had it for 10 years, that is a very long credit history you would want to keep, try putting it away like @TiffanyConnors said. And use it once in a while or not at all.
But if it would be stress and you won't care about the negative impact it will have on your credit report because you already have your house and stuff, then go ahead and close it.
Hi @TiffanyConnors, the reason I wanted to get rid of Capital One is I wanted to upgrade that to unsecured card later on. And my first premier they just suck lol. They charge me $7/month even though I don't use them on top of $80 annual fee. I have no problem of just stashing the Capital One in my drawer and not use it. The problem is first premier really. And yes my goal is to keep my credit score getting higher. Thank you
If it is charging you fees, it would probably be worth closing even if it does slightly affect your credit score, especially if you are not using the card.
If you are not getting charged fees and you are able use it very little or use it and pay it off right away, then keeping it active is probably going to be more beneficial for your score.
Closing cards will affect your credit score. Especially having them for 10 years. However, I can relate to closing the first premier. If it were me, I would've closed it long ago. I choose to research any card I may be considering to apply for. I look for the whole picture, the apr., fees, cash back(if offered), etc. That being said, Discover It card is a good card.
As for the capital one card being a secured card. Hmmm, I'm baffled by it being secured after 10 years. I know for a fact that after 8 months of responsibile use, capital one reviews your your history and may convert it to unsecured. The only thing I can figure is, you got it and either didn't use it or used it very little(like use it a couple months, made on time payments, then left it alone for awhile). In any case I would keep the capital one.
Some points to consider. See if you can be added to your husband's card(if that applies)provided the card has a couple years or more. That will up your score a little.
Another thing to consider is a credit builder loan. A credit builder loan works like this, you agree to pay x amount of dollars a month for x amount of months. The credit builder loan company puts the loan amount in an interest bearing account until you finish your agreement(unfortunately they keep the interest). At the end of the agreement you get the money.
And lastly, Experian is offering Experian Boost for free. Experian Boost is, a feature where bills like gas & electric, cable, internet, cell phone/house phone, etc. Help boost your score. The only downside is it only applies to your Experian score.
I hope this helps!
Closing cards will affect your score in two ways. It will change your length of credit history. This is an average, so if you have newer cards, then your history length will likely shorten and lower your score. It will also affect your rotating credit ratio. Say you have 5 cards with limits of $1000 each. Your total available credit is $5000. If you're using $500, your ratio is 10%. If you close two of those cards, your ratio is then up to 16%.
Credit Karma has a calculator that can help predict how certain actions will affect your credit, so maybe give that a try to see how it will affect yours specifically.
Years ago I had two cards so on paper I had something crazy like $10,000 of available credit. Because I only regularly used one card with a better interest rate, eventually the other company closed my account and my available credit shrunk in half. Keep that in mind should you be considering a loan at some point. You can use one card like every other month to keep it open and keep that available credit.
@Ana24 closing the store only credit card will not affect your credit After reading all of the replies above and getting more information - close the card that is charging you fees asap! I would keep the capital one card for a few more months before closing it.... if you just want a capital one unsecured card - you may want to call them and ask if they will automatically switch it to an unsecured card as then you wouldn't have to close an account and have score take any dip.
I was considering the same thing. Close the ones that have fees. I am considering talking to a financial advisor first before doing so. It's free if you bank there.
My husband and I were going through this. We paid off all of our store and other credit cards two years ago. We kept two regular mastercards. We were trying to increase are available credit and decrease our credit usage. We actually were threatened by some cards that if we didn't spend anything on them they would close them anyway. So we decided to spend a little every few months and pay them off quickly. Since we started doing that our credit score actually is on the rise.
It will drop your score and take away from your credit history. Just cut them up or put them away so you dont use them. Then put something small on it about once a year and pay or off to keep it active.
Good advice about using it every other month or so--I applied for a loan once and got it super quick because I had so much open credit - had a $10,000 limit on a card I didn't use....because I didn't use it the company closed the account and my credit limit shrunk by 10K!