Closing Credit Cards

[Bodie1969]

Hi,

 

How much of a hit will your credit report take if you close a bunch (5+) of credit cards that you never use?  I have a few that I know I will NEVER use again and instead of them being closed by the lender for non-use (which I've heard is possible), I'd rather close them on my own.

 

Anyone have any thoughts on this?

 

Thanks,

Jen

[bradk14]

unless the cards charge AF or monthly fees that you can't get rid of/waived, it's pretty much ill advised to close accounts willingly. on the contrary, you would be encouraged to use each one in small doses probably at least once every 6-12 months just to prevent the account from being closed due to non-activity. as long as the account is open and in good standing, it only benefits you to keep it alive.

 

but if you are set on closing them despite their benefits, the only impact you need to worry about is the AAOA which would theoretically be adversely affected by closing accounts.

 

FWIW, I don't believe it's a negative if the creditor does close the account purely due to inactivity. it should make no difference to anyone.

[hegemony]

a lot depends on what your long term goals are and what your credit profile looks like without these cards.

 

if you've outgrown them, by all means close them as long as you have other quality cards. Don;'t close them all at once. You can close one every-other month and monitor any score changes before you close them all.

[Konrad2012]

7 hours ago, Bodie1969 said:

Hi,

 

How much of a hit will your credit report take if you close a bunch (5+) of credit cards that you never use?  I have a few that I know I will NEVER use again and instead of them being closed by the lender for non-use (which I've heard is possible), I'd rather close them on my own.

 

Anyone have any thoughts on this?

 

Thanks,

Jen

Closed for non-use by lender is meaningless.  If there's no-AF, let them ride as long as possible.  If any are Visa/MC, as was previously stated by a beer or a glass of wine on them once every 6 months so they can age for eternity.  If they are store cards, let them ride until issuers shut them down (which could be a very very long time).  Just pads your AAOA and any utilization. 

[cashnocredit]

If any of them are the oldest don't close it. Even closed, they count up to 10 years. The oldest, positive account is at least as useful as average age of accounts.

 

As for the others, closing them won't affect your credit per se but could reduce your utilization. if it's low, even with the lost CLs, then the impact is minimal to non-existent. But as Konrad pointed out, no one cares if cards are closed by the creditor or the individual. At least the way FICOs are currently calculated and underwriters likely don't care.

 

But if they are old nothing wrong with using them infrequently just to keep tem open. Probably your best move.

[Bodie1969]

Good feedback, thanks everyone.  I have outgrown many of them and have plenty of "good" cards now, but I will keep them open and just let them age.  None charge an annual fee so it won't cost me anything.  I just need to remember to use them.  LOL

 

Thanks so much. 

[Konrad2012]

1 hour ago, Bodie1969 said:

Good feedback, thanks everyone.  I have outgrown many of them and have plenty of "good" cards now, but I will keep them open and just let them age.  None charge an annual fee so it won't cost me anything.  I just need to remember to use them.  LOL

 

Thanks so much. 

For the Visa and Mastercards, just put one in your wallet. Next time you have a bill for a coffee or a donut or a beer or whatever use it.  Go home that night and push whatever the charge was from your checking to that card.  That way the card is paid in full and never reports a balance.

 

Another way is to use it for a couple dollar reload to an Amazon gift card.  Whatever floats your boat. 

 

Then go to your phone or computer calendar and set a reminder 5 months out for Crappy Visa #1 or Worthless Mastercard #2. 

 

Besides the reasons I listed for leaving cards open, I also have a purely speculative reason.   #1  VantageScore gives increased weight to AAOOA over FICO (FICO seems to place extremely little weight to AAOOA).  #2  While VantageScore is basically irrelevant now, that's not to say it's not going to have relevance in a couple years.  #3 We also don't know how the proprietary internal scoring algorithms of various lenders view AAOOA.

 

#1 is a fact.  #2 is presumptuous but there are already moves in Congress to explore new scoring models.  #3 I obviously can't prove but it would be prudent to assume since a well known score model places weight in AAOOA that others could as well.