Credit and cancelling all credit cards

[naughtoj]

Ok, yes, I have a lot of credit cards. LOL

I hate, hate, hate them!! Finally got sick of the forever-in-debt thing and rolled the huge chunk to one teeny tiny interest card but haven't cancelled the others. Everyone always tells me that locks down your available credit and makes your credit score go way down. So, what, do I live with all of them forever? Why can't I just keep ONE? Anyone know how bad that would really hurt your credit if you cancelled all? I have so many that I can't keep track and then I have to check online every month and make sure there are no charges on them but a zero balance. It's a pain!
Plus, it is all too easy for hubby to bring one back from the dead if he gets the urge to splurge. And me too. Sooooo??? Any financial experts out there???
Calling all Suze Ormans....ha ha

 

[nancy324]

My DH is the self-taught expert on this.

He says when you go to get new credit, what they look for is the amount of your assets vs. how much credit is available to you, not how many cards you have. Believe it or not, my DH will actually call credit card companies and ask them to reduce the amount of credit available to him! So, if you have 10 cards each with a $5,000 limit, it is the same as having one card with a $50,000 limit.

DH says when you go to cancel a card BE SURE that the credit card co. tells the credit rating service "cancelled due to customer's request". Otherwise, it will look bad to the credit rating service that a card was cancelled.

Nancy

ETA: Believe it or not, my DH and I can never have perfect credit scores because we refuse to carry balances and pay interest. Since people who carry balances and pay interest are what most creditors are looking for, keeping a balance results in a higher score!

 

[JT]

Janice.

The best thing for you to do is cut up those cards and close those accounts out the ones you don't use. And, some smaller companies will close out an inactive account with no activity for more than 6 months, which has happened to me on numerous occasions cause I don't use their card.
I'm in banking/finance and my credit score is considered to be excellent. For me, I use one major credit card only at a premium rate. It's OK to lower your signature debt/available credit of what shows up on your credit score so that it won't interfere with collateral based purchases requiring credit like home refi/purchase or auto loans. A creditor will see those cards out there and when trying to purchase a big ticket item will calculate your debt as though those credit cards are maxed out.
It's important to keep paying early or on due date of cards too.
Some resoures to consider is Dave Ramsey, Credit Counseling, Money Magazine. Yes, my viewpoint might be conservative but I'm sure others will chime in with their experiences/opinions, and you can make the decision that works best for you.

 

[angie_nrs]

Actually your credit score is based on the following 5 things...

35% - payment history
30% - amounts owed
15% - length of credit history
10% - new credit
10% - types of credit used

PAYMENT HISTORY includes information on payments (or lack of payments) on specific types of accounts including credit cards, retail accounts, loans, mortgages, etc. It also takes into account the amount of delinquincy and how long past due the payments are. The number of past due items and presence of adverse public records such as bankruptsy, suits, leins, and wage attachments are also factors that affect this score. On the bright side, the number of accounts paid as agreed is also reflected in this score. To improve this portion of your score, simply pay your bills on time. If you have missed payments in the past, that information will remain on your record for 7 years even if you pay it off sooner. Get current on your payments and stay current even if you are only paying the minimum required amount. Just closing an account will not make it go away.

AMOUNTS USED is simply the amount you still owe on accounts. It also accounts for the proportion of credit lines used. If you are using only 20% of your available credit verses 75% of your available credit, you score will be higher. To improve this portion of your score keep balances low on credit cards and other credit accounts. Pay off debt rather than just moving it around. Don't close unused credit cards and don't open new accounts just to increase your available credit, as this could actually lower your score. That is why it makes more sense to pay off your credit card debt and keep your account open instead of closing it out.

LENGTH OF CREDIT HISTORY reflects the time since accounts were opened and the time since account activity. Older accounts have a positive effect on your score, while new accounts have a negative effect, especially if you open several new accounts in a short period of time. Opening new accounts responsibly and paying them off on time will raise your score in the long term.

NEW CREDIT reflects the number of recently opened accounts and number of recent credit inquiries. It also considers the time of account openings and credit inquiries. Opening several new accounts within a short period of time will negatively affect your score, as will multiple recent inquiries and vise versa. On the bright side, it also accounts for re-establishment of positive credit history following past payment problems. To improve this score, make sure you do your rate shopping for a given loan within a focused period of time, usually about 2 weeks. All inquiries made within a short period of time will count as one inquiry instead of several. It's OK to check your own credit score, because this will not negatively affect your score.

TYPES OF CREDIT USED includes the number of various types of accounts you have. Open credit accounts just as needed. Opening new accounts just to increase the mix of accounts you have will likely not help your score.


With this in mind, I would definitely get rid of any cards that tempt you and that you know can get you into future trouble. If the temptation is not there, you have nothing to fear - so get rid of it! However, it takes discipline to get a great credit score and keep it. I hope this information helps you make an informed decision.
;-)

Angie

 

[acatalina]

Oh and wait till you go to cancel them.... It is a fight... I told Discover, what part of clodse this account don't you understand...I paid them off this year and i use my small business line and pay it of every month..
I has those boys up to 47grand at one time...
Never again.I did play the ccard shuffle game for the no interest for a while...
Pay one off they send you little or no interest checks.Even the 75.00 fee is better than the interest.

Just put them away....It is not worth it...

Anne
Aka( Storm)

http://www.picturetrail.com/acatalina

 

[dlavie]

Freeze them in a block of ice. They're there if you absolutely had a crunch but they're inaccessible for an impulse.

I've read that the canceling of clean accounts is bad for your "record".

Cancel anything with a fee.
dave

 

[naughtoj]

Thanks for the advice.

Have you guys seen the crazy offers the CC companies have come up with now. I know b/c I am one of those musical card people who move here and there.

Have you seen the Discover offer where the front of the envelope says "0% for life", with that little famous asterick next to it (Gotta love the asterick, ha ha). Then you read the fine print ALL THE WAY at the bottom and it says in fact you will only have the 0% for like 2 months, but it will be extended for life if you just make two purchases a month at your purchase APR. Trick is, this is the part they hope you are too stupid or too careless to get...everthing you charge after the balance transfer moves to the back of the bus. All your payments will apply to the 0% before it ever even touches the 10% or whatever. At first I thought I could beat it. What if I purchased two packs of gum a month? That'd probably be worth it but then I thought, who wants that headache!

Citibank upped their fee for balance transfers. Well, they kept it at 3.0% of the transfer, 10 bucks min, but took the max up to 250.00!!!! Crazy!

Bank of America, I think, has an offer at 0% until Oct 07, but the good ol' asterick leads down to a blurb that says the 0% will actually only apply till Jan but will be "extended" until Oct as long as you make another balance transfer in the month of January at the "offered APR at that time". Yeah, something tells me that "offered APR" will be through the roof!! AND will, you guessed it, move to the back of the bus!! In addition, there is a fee, 3.0% max 90.00 but then is says, "1.50 minimum finance charge". What is that!!!????? I mean, if the offer is 0%, why would I be paying 1.50/mo??? Gosh, they get you wherever they can now. I don't remember it being so sneaky in years past. CC companies have reached a new level of lowness. Good reason to GET RID OF THEM ALL!!!

I thought that creditors look at your average acct age and when that gets smaller your credit goes down. With that logic it makes sense to keep open only the one you have had the longest. Plus, I was reading on the net that cancelling a card does not make it go away and that it will still appear on your credit report. So what good is it anyway!!???

I like the idea of freezing them in ice. Something tells me I'd find hubby hovering over that block of ice with a hair dryer. Believe me, if he wants something bad enough, he'll do anything. Like that quad he wants now...(major rolling of eyes and big fat sigh....)

Thanks all!

 

[JT]

Janice,

It wouldn't hurt to find out what some financial experts say, ones that have actually wrote books and are recognized for it. Dave Ramsey is the only one that comes to mind.

Credit unions usually have good rates and no or little fees on their cards and will do a balance transfer from another company.

Merry Christmas and Best of financial health to you and your family.