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T Y | I have payed off all my credit cards. So is it a good idea to close the accounts? |
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Laissez-Faire Guy
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NO! I mean don't do it. The answerers before me gave you bad advice that can only reduce your credit score.
The only accounts you should close are those that have annual fees, and only if you've already asked them to waive them and they won't.
Here's why. A very important part of your credit score is your credit ratio. That's how much credit balance you have, vs. your total amount of credit available. Ideally, you want that under 20%. There is no penalty whatsoever for having many accounts open, as long as the balances are zero or low.
If you go closing accounts, that reduces your credit available, increasing your ratio, and reducing your credit score.
Another important factor is the age of your credit. Keeping accounts open increases the length of your credit history and that helps your score.
I have cards I rarely use that have been open for over 20 years. My last FICO score as of 2 weeks ago was 790. They top out at 850, and the average US score is like 674, so I know what I'm talking about.
You don't have to use those other cards. Keep 1 or 2 in your wallet, and toss the rest into a drawer somewhere. If you don't want to use them, cut them up, but leave the account open anyway.
By the way, don't ever buy any credit score unless they specifically state it's the FICO score. Otherwise it's their own internal credit scoring system that no one else uses, and you would be wasting your money.
To Clifton who thinks a FICO score means nothing. Wait until you wish to purchase a home. You'll also find out that insurance companies are starting to use FICO scores to determine risk. A good FICO score opens a world of opportunities, and get the best terms on things. |
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MeInUSA
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Well, if you can discipline yourself NOT to uses them it's best to keep the accounts open because it helps build your credit. You could just leave the accounts open and DESTROY the cards so you don't use them. In an emergency you can always call the card company and they'll them you have lost the card and can they send you a new card.. |
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cougarkean
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NO!!! Dont close all of them!! In order to have a decent credit rating you need at least 3 credit accounts open. The more you have open that dont have any balances on them shows that you have alot of available credit on them that you dont use, which in turn shows thats your a responsible person. |
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smileyc117
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No, do not close the accounts! Since you have paid them off you need to cut up the card and forget that the account is open. By closing the accounts you will decrease the amount of credit open to you and that will lower your FICO score. Financial experts usually advise this! |
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The Scorpion
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It may adversly effect your credit to cancel because it changes your credit situation as far as available credit compared to debt. Others may be able to answer more completely but this is an issue. |
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pearlmel
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NO NO NO. this is the biggest mistake by borrowers i see every month!
paying off your cards will raise your score dramatically because all these creditors will report you are in good standing! when you close the accoutns they report once that you closed the account and now you have less creditors sending good reports and your score will suffer!
keep accounts open and only use the cards once every 6 months! i have about 10 cards i use them rarely and pay them off at the end of the month on the month i use them!
this is the best way to go let the cards once paid off reprot for a for a while and watch your credit score soar! |
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Hot Star
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I would close some of them. Make sure you get letters from your creditors showing no balance/and account closed. I would keep a a couple of credit cards with no balance open to demonstrate that you have control over your finances, as in no impulse purchase. And you may have an emergency where a clear card can help you out. At least that is what I read and heard from financial "gurus." |
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The old man
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Yes and no, keep one at least available for emergencies .. but cancel the remainder .. if you hahe paid them off correctly you should have a good credit raiting and thus be able to replace them at any time |
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alyuzz
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YES..ifu have more than one credit card. Just make sure u just have only one and close the others. That because u just need only one credit card. Choose the best with no annual fees, no hassle..international acceptance and have many branch.
NO if u just have the only credit card. At least, u must have one credit card for using in emergency, when u short of cash, when travelling for safet purpose and to make sure u attended fairly and highly in some situation. |
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IloveMaryKay
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you didn't say why you considered doing that. did you screw up and get yourself in debt? what's up? if you did, definitely keep at least one credit card, the one with the lowest interest. keep that one so that you can keep your credit score up. don't abuse it. trust me, i KNOW! i've done it. tear up the others, use one for emergencies. use it too to build your credit. buy something small, wait for the bill, pay it off. keep doing that for 18 months and you'll be surprised what it does to your credit score! |
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Chris
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It is fabulous that you paid off all your credit cards.
As for closing the accounts.. this is what I'd advise..
Keep 2 of them open.. 1 for emergency, and 2 for back up if the first emergency isn't enough or whatever..
Other than keeping those 2 for emergency.. there is a reason of credit.
If you have an open account.. and have it current, and/or are paying on it currently .. then every month when that credit card company reports on your credit, they give a positive report which is reflected in your credit score.
If you close all the credit card accounts.. then you know longer have an account, and therefore, they are no longer reported anything bad or good on your credit, so your credit score doesn't improve one way or the other..
So.. keeping 2 open.. is a good idea, both for emergency reasons, and for positive credit score reasons.
Finally any credit card accounts you do close, make sure you get a letter from them stating the account is closed and with a zero balance. Staple a copy of that letter with your last statement from that credit card, and store it away with your files in the case you ever need to proove that that account was taken care of.
Also.. no matter what you decide.. now that your credit cards are paid off.. in the next 3 to 6 months, I'd pull a copy of your credit report, to confirm that the accounts were closed, and that everything is cool. Also see what your credit score is like.. and then pull your credit report 6 months later, and see if it's gone up any.
Most people have crappy credit scores.. because
a) they don't pay on their bills on time
b) they did a bankruptcy or foreclosure or both.
c) they have too many accounts open.
d) they have no accounts open.
So pulling your credit report to make sure that everything is correct on there.. that is very important.
Other than that.. congratulations on being debt free !! |
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Clifton
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Yes, close those accounts! Good job becoming debt free! Everyone seems to think you should keep at least one account open for an emergency and so your credit score won't fall. One person even said to keep an account open in case you have an emergency so "have the money". That is pretty dumb. Others on here are even telling you to back into debt...even dumber!
When you paid off your cards, you made the decision to get out of debt. That was an excellent decision. When you become debt free and don't plan on doing debt ever again, FICO means nothing, absolutely nothing. You can buy anything with cash, no matter what FICO says. As for emergencies, If you have $1000 in the bank you actually do "have the money" in case of an emergency. Again, great job! |
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wrgmama
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Yes. I would close all except one, which I would reduce the balance on, down to only $1000. That way, if it is an emergency, like a funeral, you have money. |
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