Question about Credit....

[Merlyn3D]

Okay, so I basically have 2 credit cards I never use and 2 credit cards I always use (an amex and a MC). My amex has been open the longest (about 5 years), and I've been considering closing one of the two credit cards I don't use (the other I wanna keep open because I get my FICO score for free every month with it).

Now as I understand it, the more available credit I have, the better my credit score, right? If I close one of those credit cards, will the reduction in available credit actually hurt me?

 

[dullard]

Originally posted by: Merlyn3D
Now as I understand it, the more available credit I have, the better my credit score, right? If I close one of those credit cards, will the reduction in available credit actually hurt me?

That is correct only in some situations. If you have a large credit card balance compared to your total available credit, then you have a high balance/credit ratio. This could hurt your score. In that case, closing an account would make this ratio even higher and hurt your score even more. Or, if you were borderline before, it could put your ratio solidly into the point where it does hurt your score.

Best thing to do in most cases: just use it a couple times a year and pay it off in full. Why bother to close it?

 

[Merlyn3D]

Originally posted by: dullard

Originally posted by: Merlyn3D
Now as I understand it, the more available credit I have, the better my credit score, right? If I close one of those credit cards, will the reduction in available credit actually hurt me?

That is correct only in some situations. If you have a large credit card balance compared to your total available credit, then you have a high balance/credit ratio. This could hurt your score. In that case, closing an account would make this ratio even higher and hurt your score even more. Or, if you were borderline before, it could put your ratio solidly into the point where it does hurt your score.

Best thing to do in most cases: just use it a couple times a year and pay it off in full. Why bother to close it?

Well...I guess I should specify...I have no balance whatsoever on the two cards I don't use. All my balance is on the MC (that might get carried over) and the amex is pretty much paid each month. I also heard that haven't too many credit cards might hurt your credit, but don't know if there's any truth to that one.

 

[Merlyn3D]

no one else knows?

 

[Reckoner]

If you want your credit score to drop 5-10 points close one of them

 

[PhoenixOrion]

If the two unused CC's are a couple of years old and they don't have annual fees then just keep them. I don't see harm in having those accounts open.

If you feel the big need to simplify, i.e. less institutions to notify during address change, etc, and do not really have a large debt/line of credit ratio then you should close them as with all your other "consumer credit" accounts that you don't necessarily need or use.

 

[Descartes]

Closing them will almost certainly hurt your score. Utilization is what dullard is talking about, and that can account for as much as 30% of your total score.

A large percentage of your score is history, and that's really what is at issue here. Closing the Amex would hurt you as you're closing out 5 years of history (hopefully you weren't delinquent). If the other card is more recent you might be able to close it without too much harm, but you'll likely take a small hit if it's a few years old.

 

[Merlyn3D]

Never been delinquent, but I'll never close the Amex b/c I just love the features on the card. So I should keep the cards open and just charge like a pack of gum or two on them a year?