[roxette]

Hi

Before you close any credit card account, look into the following situations:

• Cancel those credit cards that show the zero balance. Pay off your dues before you close it. The lenders will be able to verify your accounts if you want to escape the debt.
  
• If you are thinking of closing your account, do not let the lender understand it. If they get an idea about your intentions, they will jack up interest rates on the unpaid debt. Thus you will be forced to pay additional amount of money which was not supposed to occur.
  
• Do not close your accounts if you are planning to take out a mortgage or a car loan in the near future. Your chances of getting the favorable terms will be worsened.

Regards
Roxette

[fka]

Does closing down paid up credit cards effect your credit score?

[dmj210]

fka22, I would advise that you should not close credit cards that you have paid off and are in good standing. These accounts are generally a positive on your credit report, as they contribute to your credit history, a key factor in your credit score. Closing accounts in good standing could possibly cause a drop in your credit score, because you effectively take away part of your credit history. This is particularly true with accounts you have held for a long period of time. When you close these accounts, you lower the average age of your credit accounts, which hurts you in the credit history area. If you have paid an account off and don't want to use it anymore, just cut up the card but keep the account open. However, you do need to keep an eye on the account and not forget about it so you do not become the victim of identity theft.

[fka]

thanks for the advice i appreciate it. how long does it take having a credit card before it has a positive benefit on your credit score. i had my credit cards for about 4-5 years now. i was just wondering because i get turned down for loans because of insuffienct credit history

[stanley]

Good explanation dmj.

Another reason for not closing a credit card account is that it will reduce your available credit all on a sudden. As a result the debt to available credit ratio will increase and your score will get lowered.

However, too many open lines of credit are also not good. So you have to selective on which are to be closed. And do not close all of them at a time. Hope this helps.

[dmj210]

Stanley, good point about reducing available credit. It totally slipped my mind to put that in the post above, I am glad you reminded me.

fka, what time of loans are you being turned down for? 4-5 years, while not incredibly long, is still usually considered a decent history. However, the AVERAGE age of your accounts is also a factor. So if you have 1 or 2 accounts for 4 or 5 years, but 4 or 5 more accounts for a year or less, than the average age of your accounts will not be that old. My best advice to you fka would be to keep the older accounts open and keep them current. Make those payments every month (if you have a balance). That will be the single greatest factor in improving your credit and helping you qualify for loans at favorable interest rates.

I have an American Express Gold account and have been a member in good standing since 1994. It has an annual fee & over the years, the fee has increased. I have a zero balance on the account & the annual fee of $125.00 will be automatically charged to my account in March 2009. I am not wanting to pay this high annual fee any longer since I do not really understand why this card charges such a high fee. I have heard if I close or cancel this card, it will affect my credit score which currently is 760. What do I do??

[m.snover92571]

Yes closing account with zero balances it bad, It will limit your credit availability thus your score will go down. Leaving a good account with a zero balance on your credit report actually looks good as it shows you pay your bills.

[fixenuup]

I have read at work, I do taxes, that the BEST way with credit cards is to have no LESS than 2, and no MORE than 4. It said that you should PREPLAN to use no MORE than half of your total balance. That shows that you do not use all the credit given to you, which ups your score. Also having 2 to 4 active credit cards shows that you pay on time, pending that you do so. I will try to search for where I found this information and post a link or copy/paste it. Hope this helps anyone who's thinking about getting or getting rid of credit cards.

My credit card company is going to raise my rate to 10.99 from 7.99 and i have a option to close the account and keep my 7.99 will it affect my Credit Score ??????

[ball_mich]

I am not wanting to pay this high annual fee any longer since I do not really understand why this card charges such a high fee.

Have you asked AMEX if they can transition you to one of their cards that offers no annual fee? Like their blue card or something?

I had a Fleet credit card and once purchased by BofA, they started charging an annual fee. I complained and in year one, they waived it. In year two, they waived it after I complained again. In year three, they said, if you want to avoid the charge, then pick another BofA no annual fee cards and they just moved the account to a new card basically. I don't know exactly how this looks on my credit report, but I didn't have to fill out an application or anything.