Closing credit card account

[giffy]

I was listening to a financial show on the radio recently and they said that when you pay off a credit card, cut it up and quit using it, you should always close the account............."something alot of folks fail to do". My question is, I am sure I have done this, how do you go about finding out what credit accounts you still have open? Does a simple credit report show all the open accounts you have even if you owe nothing on them?

giffy

------------------
GiffsFarm

[arabian knight]

On the other flip side of things I was listening to another financial adviser Clark Howard And He says NOT to close them because they is no way from getting that closer to show up on you credit report whether YOU did it OR the Card Company did it because of bad credit~~! I did close one. Before I heard that But Have not done on any of the others Just Don't used them. Open accounts Don't affect the credit report as long as there is NO Balance. BUT Closed Ones do, have an adverse effect on ones Credit report.
Just another advisers opinion I guess. Just the Opposite from one another

[GoatsRus]

Closing out your credit cards that you are no longer using does not hurt your credit. There is still a rating on your credit reports that shows if you were in good standing or not. By not closing the old cards and leaving them just hanging, you can do damage to your credit. The mtg companies etc... look to see how much credit you have "Available" to you. Meaning that just because an account has zero, doesn't mean you're going to not run up the card in the future. You total available credit is part of how they determine how much to extend to you. You can get a free credit report from the big 3 credit reporting companies once a year. Check it over and make sure all the information is correct and belongs to you.

[highlands]

Closing credit card accounts that you no longer use _DOES_ hurt your credit rating. We closed a couple of cards we didn't need. Our credit scores dropped 50 points and that was the reason given. I asked both the credit report company and the credit card companies about this later and they both said it is a bad idea to close cards because it makes it look like the card was closed against you, not by you. Even though I sent a letter to the credit reporting company for making a notation on my account it did not help. It took a couple of years for the effect to wear off.

What we have learned is:

A better thing to do is keep the account open, use it lightly, pay it off monthly and you then build up a higher credit rating.

Do not open more cards.

Keep all cards down as low as possible, at least below 50% of credit limit.

Always make payments if any is due EVEN if they say no payment is necessary.

Pay 3x the minimum or ideally the whole thing.

Call every six months to ask for your credit card interest rate to be decreased, annual fees waived if any, etc.

Every month make sure you receive every credit card bill. Call THEM if you don't.

Every month go over the bill carefully to make sure there are no charges you don't recognize.

Every month go over the bill to make sure they haven't changed the interest rate or terms on you, socked you with fees, etc.

If you get hit with fees, call and ask them to be waived.

Annually get your free credit reports and go over them with a fine tooth comb.

Always be polite and firm. Always be in the right.

[kmaproperties]

DO NOT CLOSE THE ACCOUNT!!!!!
we had 4 cards, paid them all off when we sold our last house, called and closed the accounts. When we went for our new home loan 2 months later we found our credit score dropped 60 points because we canceled the cards. the financial gurue said we should have kept them open and close them after 6 months of non use.

[NCGirl]

Well it depends.

Lets say you have 4 CC's with $5000 limit on each.

2 of them you have no balance on.
You carry a balance of $4000 each on two of them.

So your ratio is $8000/$20,000.

So you close the 2 that don't have balances.

Then your ratio is $8000/$10,000.

In this case it will usually look worse on your credit report as you are almost maxed out on your credit.

[fransean]

Your credit score involves what credit is available to you (your cc limits included) and of that amount how much you owe. So when you close an account you are cutting off that amount that is available to you - lowering the amount of credit available to you and if you owe on something else then your percentage of owed versus available goes up.
Hope that made sense.
Bev

[Ana Bluebird]

Our experience has been that if you do close your account, it doesn't really close it----they still keep that number for you, just a zero balance. You never actually give up that account---ever! Be careful about opening accounts just for that 10% discount for opening an account. You just can never get rid of it. I've checked our credit card ratings and I was amazed at all the old accounts that were still there and ready to be used. How do you get the crediters to erase them?

[RachAnn in NW Okla]

https://www.annualcreditreport.com/cra/index.jsp

is the place to go to get a free annual credit report....I asked for all 3 of mine at the same time. in retrospect I wish I would have just asked for 1 company and then in 4 months check the next....this way I dont have to go 1 full year without seeing what is on my credit

what we found was old hospital bills that werent ours (DH's parents bills on DH's credit = nightmare) no wonder we had a crappy credit score! (which I found last year or so on a FREE 30 day trial....I did have to call and cancel the service within 30 days)

Rachel

[Selena]

You can close it "positively" by requesting the issuer to close the account by consumers request. Your FICO score is based on payment history, longevity of account, and debt to credit ratio. SO if your card was relatively new and had a low limit (and account is paid off of course), probably won't hurt you too bad. One thing to calculate (Suze Orman does a decent job of explaining this) is your debt to credit ration. If you have $10000.00 of available credit, owe $1000, you have "used" 10% of your available credit. But if that paid off card has a $5000.00 limit and you close it, you now have used 20% of your available credit. I don't know what the "red flag" percentage is. Another thing that frosts my heinie is when your credit card company merges/get bought out and the "new" company cancels your old card and issues a new card. You can lose your long term, good history on that account. Clark Howard is ok in my book as is Suze Orman. Both seem to be able to explain things in layman's terms.

[suburbanite]

I have one credit card. Recently I opened another because doing so saved me about $150 on the sale price of a bedroom set, such that with the sale price I saved about 35% of the regular price on the set. I have used it a few times since then because I was under the impression that using it and paying it off completely was a good idea.

I have also heard that not paying an entire balance once in awhile was better for your credit than paying in full every time because otherwise the credit card company doesn't get 'fed' by collecting any interest--is that true or not?

Anyway, I'm thinking about cancelling the new card, which I've paid off completely every time (it has a 21% interest rate, being a store card; my other card is below 10%). If I cancel it, my debt to available credit ratio will be well below 50%--I'll be nowhere near having used half my available credit, because I have less than half of the other card used. Would it adversely affect me to close it, based on what you've read?

[tnhomestead]

Wow -- i like my FICO score -- zero!!! I dont do credit! The bible says the borrower is slave to the lender -- and I make a lousy slave! And yes I can still fly, rent cars and hotels -- i use a debit card or gasp sorry about this -- cash!

[EasyDay]

When we first became debt-free, I closed all CC's except 2. One of them raised my score by 3 pts by keeping it open. The other is the one we keep for emergencies....if we exhaust our savings, which is highly unlikely. (To answer someone's earlier question, yes, the credit report shows WHO closed the account... you or the financial institution.)

We did find, though, that if you don't owe anyone money, it's harder to borrow money. We found this out when we had to buy a truck. But, our bank that we had financed (and paid off our land) through, though a little higher rate, was more than willing. That's good enough for me. I know I can count on them, should I need to.

We are no longer completely debt-free because we'd rather keep a large savings in case of emergency instead of paying the truck off. I know we could save the interest, but I feel more secure this way than reducing our liquid assets.

[sheepish]

One other consideration is that an open credit card that you never check on because you have cut it up, is an invitation to undetected fraudulent use by someone who steals your info. It is a small possibility, but a real one, that creates huge problem for those who experience it.