To Close Out $0 Balance Credit Cards or Not
I've been receiving conflicting reports regarding closing out credit cards accounts that are at a $0 balance.
One source says that if you have credit cards with a $0 balance, it will *hurt* your credit rating to keep them open. The reason they cite is that it shows how much debt you could potentially incur.
Another source says that it will help to have $0 balances because it shows that one hasn't borrowed on all cards available and is capable of "managing" credit.
Personally, I recommend closing them and having the company send you a letter stating "closed at request of card holder." This will show up in your credit rating that you closed the card.
It is too easy to become the victim of ID theft with credit cards open like this, IMHO.
Re: To Close Out $0 Balance Credit Cards or Not
Please think carefully before you do this!
In the February issue of Money magazine - article "Four Steps to Spotless Credit"
* Open and close accounts with care: The most valuable accounts are your oldest ones. If you cancel credit cards that you've had for a long time, for instance,you may take a file that's 20 years long and reduce it to four or five years.
Length of credit history counts for 15% of your credit score. These accounts are not hurting you by existing, and they could be a help when it comes to applying for a new line of credit. Use the account every three to six months for something minor - then pay it in full- so the card company doesn't close it out for you.
According to the article, the 5 factors that determine your credit score are:
35% : Bills paid on time.
30% : Ratio of debt to credit limit. (Try to stay at 30% of your available credit for each card or loan.)
15% : Length of credit history.
10% :Credit applications.
10% : Variety of loans.
Also, it can hurt your score to apply for a "flurry" of credit, but shopping for a mortgage or a car loan within a 14 day period will only count once.
You can lose points for a having a finance company listed among your creditors. This includes those "six months same as cash, etc.." offers, so watch. They recommend NOT shopping for big ticket items within 60 days before you apply for a loan.
Hope this helps. Helping people to get their credit in shape so they could buy a home used to be a large part of my job.
Email This To a Friend
Topic Commands
Click to receive email notification of replies 
Click to stop receiving email notification of replies