Post # 1
I’m working on improving my credit score so that when I finance a year within the next year, I get the best rate possible. My score is in no way bad (all in the 700 range) but I would like it to be as good as possible.
So, the “worst” part of my credit history is my average length of credit accounts. My oldest account is a credit card that I’ve had for 8 years (since I was 18). I also have a store credit card that I don’t use anymore that is only two years old, and another credit card that we’re using for wedding stuff (we pay it off montly, but it earns cash back so we put all the inital purchases on there). I also have student loans.
I know I should keep my oldest credit card open (I use it about once a month and then pay that off so the account doesn’t close automatically), but what about the store card? Would it hurt or improve my score to cancel it? Since our “wedding” credit card is younger, then I’d be averaging an 8 year old line of credit with a one year old line of credit, which would increase my average length of credit.
However, this would also decrease my credit-to-debt ratio by 3k! So…advice?
If it helps, all of my accounts are in good standings and I have no collection marks on my history.
Post # 3
@StL.Ashley: I’m not an expert, but never cancel a credit card. It shows credit history and properly managed credit. Plus closing a card does lower your credit score. With the decrease of 3k, I wouldn’t close the card. I don’t think trying to lengthen your average history by a few years will be worth the damage.
I’ve heard that you can get a short personal loan to show installment loan history & it’ll help. I haven’t done that though because personal loans have high interest rates. Do you have anything that’s close to being paid off? That’ll increase your score.
I’m trying to get mine across the 700 mark currently.I’m early 20s and have no spread of credit history…just credit cards, car loan, and student loans. I’m hoping paying my car off next month will get me there though!
Post # 4
I closed store cards and it was no big impact. I think it may temporarily lower your score, but it’s not true that you should never close anything. I would never close my oldest account.. but the odd store card? No big deal. Yeah, if you close three cards and apply for a mortgage the next month that’s a bit stupid.. but who would do that?
I think lowering your debt would help.. and possibly raising credit limits so your debt utilization ratio is lower… like if you charge $2,000 on a card with a $3,000 limit it can look like you’re close to maxing it out.. but if you up the limit to $5K it looks better.
Post # 5
If it doesn’t cost money (ie a yearly fee etc) to keep it open, you should definitely keep it open so that it doesn’t decrease your debt-to-credit ratio!
Post # 6
@StL.Ashley: if you cancel the store card, it will without a doubt lower your credit score. Your debt to credit ratio will go down and so will your average credit length. It has benefitted me to carry a small balance on my card and make payments towards it. I have a credit score of 750+ and I’m only 22
Post # 7
@StL.Ashley: Closing a credit card will reduce the score slightly HOWEVER, having lots of available credit can also hurt you on applications. From a risk perspective some lenders will consider the amount available to you and how much ‘trouble’ you could be in if you were to max everything out.
The best thing you can do is carry a small balance, pay of the majority monthly but leave a little. For some reason this works.