Credit Score?
Is it true that if you cancel a credit card, it goes against your credit?? I've heard that you should just cut the card up and don't ever use it again. I had a credit card through my bank, and now they gave me a better interest rate w/ an actual line of credit w/ another card, and transferred my money to the new card which has a higher balance and they said to call the number on the back of the card to have it cancelled, but I've heard that it goes against your credit score. Is it true??
Public Comments
- Believe it or not, closing an account can have a negative impact on your FICO. Some lenders will look at your credit report and say you have to little credit and will not issue you a credit card.
- yes it can go against your credit because although you are eliminating that debt you are still remove a good credit reference from your account if you dont want the card anymore then cut it up and never use it but keep that good history on your report
- It is true that closing an account can negatively effect your credit score. Your score is largely impacted by available "unused" credit. So open credit cards with zero or low balances are actually a good thing. If you close them you reduce your "available credit". I know you might have to pay annual fees but with time your credit worthiness raises, and being able to get credit with lower interest is worth more then the annual fees. As for transfering balances, think before you act. Number 1: after initial transfer how soon will the interest on the balance change, Number 2: credit cards with more then 50% used credit negatively effect your credit score, Number 3: if you decide to transfer have a plan to pay it off during the introductory rate AND STICK TO IT. I hope this helps.
- Yes. However, although you may lose a few points on your credit score it should only count for six months at which time those points will be restored. Keep in mind that credit counselors advise not making more than 1 hit on your credit report in any six month period. What that means is if you need to open a new account or close an account do only one or the other in a six month period to allow your score to recover between activity. This is not a hard fast rule. If your credit score is in the high 700's or 800's it probably won't impact you very much to cancel a card and open another and at the same time apply for financing for a new car. This will dump your score for that six month period but you will still maintain good credit. Just may be limited as to how much more you qualify for in that period. Keep in mind that everything you do in regards to financing related to a financial institution or business that requires a financial commitment on your part will impact your score. And that includes canceling or opening a new account. But keep in mind also that if you just cut up your card and don't use it, it doesn't mean the account is not there. It can still be subject to some thief or hacker getting into your info somehow and accessing your credit account. Good luck!
