Open or Closed?

[sdsumarisa]

I am working on paying off multiple credit cards. My plan will have me debt free (well...not including student loans) by spring 2012. My goal is to be able to qualify for a home loan by 2012 w/ my cleaned up credit.

My question is, should I close out my credit cards as I pay them off? I do want to keep my USAA cc open (that credit union rocks), and I'll most likely keep Sears open b/c there's always some new appliance we need during the year. That said, should I close out the other cc's that are only a couple yrs old? I just don't want to have it "hurt" my credit score for closing it.

Thanks!

[kork13]

In general terms, keeping your CC's open will do more for your credit score than closing them. That will particularly be the case one they are all back in good standing (little/no debt carryover month to month). Obviously close any that charge a monthly/annual fee that doesn't benefit you adequately to justify the fee... but otherwise, you can just leave them open and not use them (or use them sparingly) and your credit will improve itself over time.

[Ima saver]

I agree, keep them open and pay them off monthly if you charge small amounts.

[mrpaseo]

I still don't understand why people hang onto the retail cc's when every store takes Visa or Mastercard. As soon as I owned a Visa, I dumped all the higher charging store credit cards.

Back to your question, if you have the will power to not use the cc's, then hold onto them, place them all but your primary one in a safe (Or safe place) and watch your FICO grown. If you do not have the will power to not use them, it would be more beneficial to close them and destroy the cards.

Best of luck with your goals.
Ray

[JoshuaHeckathorn]

I agree with the others. Closing them will likely do more to hurt your FICO scores than help them.

[littleroc02us]

If you close your credit cards your score will go down for a bit, but we kept one open that we use and pay off each month and our credit scores are great. We have a mortgage which probably helps and no debt.

[wincrasher]

Things that help your score:

Low utilization
Multiple cards
High limits
Age of account - older is better
Multiple types of credit - fixed, revolving, etc.

If you want to kill cards, start with the newest, with lowest limits, first. But frankly, unless a card is costing you money in fees, etc, I'd keep it active. I'd also seek higher limits on the cards I already had before I would open new accounts. Who cares about interest rates when you don't carry a balance?

Good luck.

[PennyPrincess]

Keep them open. I closed a few off several years back after paying them off, and my score did take a hit. Now I keep them all open, just not in my wallet.

[am_vanquish]

I still don't understand why people hang onto the retail cc's when every store takes Visa or Mastercard. As soon as I owned a Visa, I dumped all the higher charging store credit cards.

Don't want to hijack the thread, but we keep a few retailer cards open to take advantage of interest-free promotional deals. Our two best ones are the local furniture store and Best Buy. Virtually everything we buy is eligible for 1-3 years interest-free if bought with the retailer card. We could either: (1) buy with the Mastercard, get the rewards, payoff immediately or (2) buy with the retailer card, leave some money in savings, payoff over 1-3 years without interest. Sometimes the interest earned on leaving money in savings outweighs the rewards from using Mastercard.

Back to OP: what everyone else said. BUT ... be sure to monitor your spending behavior. If leaving the cards open as you pay them off is too tempting and you start spending again, then revise the plan and close them. If that situation comes around, you should abandon numbers for the sake of psychology.

[ConquerWithTruth]

keep them open.