Cancling your credit cards will hurt your credit

[hadees]

So #161 Kevin was talking about canceling his credit card. I know it sounds nuts but doing so will actually hurt your credit. What happens is part of your credit score is based on your max available lines of credit and what percentage of that you are using. Your best bet is to just keep the card but never use it and occasionally check the balance. Only cancel the card if you have no self control and will eventually end up in debt again by merely having it.

I learned this from listening to Clark Howard (http://clarkhoward.com) which is a great radio show, if he isn't on in your area there is a podcast. Here is a link (http://www.bankrate.com/brm/news/cc/20061114_cancel_card_credit_scorea.asp) i found that explains this a little better.

[secret-steve-crumbles]

Clark also says that if the card is dormant for x amount of years, closing the card doesn't effect your score anymore anyway.

I closed several cards about a year ago and had no drop in my FICO.

[broderboy]

Clark also says that if the card is dormant for x amount of years, closing the card doesn't effect your score anymore anyway.

I closed several cards about a year ago and had no drop in my FICO.

hmm i should try canceling my old chase card. I don't think I've used it since 2004

[bigshotprof]

I am convinced that everything will drop your score. I got a credit card from Juniper last February to finance a macbook. The day I got the card, I took out a $100 cash advance--note that on the bottom of the piece of paper to which the card was attached, there was a "check" for cash advances. THAT SAME DAY Juniper lowered my credit limit by 30% because I had taken a cash advance. To restate, the FIRST TIME is used my card I was penalized for using it. And yes, the nect month my score went down.

[comhcinc]

good credit scores, stuff white people like (http://stuffwhitepeoplelike.com/) without a doubt.

[secret-steve-crumbles]

good credit scores, stuff white people like (http://stuffwhitepeoplelike.com/) without a doubt.Those crazy, responsible, dad sticking around, hard working white people! Don't you know it ain't kewl to be white yo! Remember folks, it's not racist if it's about white people!

[comhcinc]

Don't you know it ain't kewl to be white yo!

never has been, never will be.

[masherscf]

never has been, never will be.

Unless you're gay, being gay cancels out all the uncool whiteness.

[comhcinc]

true. but ask any klansmen, if you are gay then you are not really white.

[xibalba]

true. but ask any klansmen, if you are gay then you are not really white.

I would but I don't know that side of my family they live a few counties away and I don't socialize with them. oh and i am not kidding. :D

[comhcinc]

i live in the south too. my wife went out with this big time nazis once or twice.

last week she told him she had married a jew. :D

[xibalba]

A great great uncle on my mom's Dad's side of the family was/is A Grand Wizard. hah

But like I said I don't know anyone from that side of the family.

[maxhdrm]

So #161 Kevin was talking about canceling his credit card. I know it sounds nuts but doing so will actually hurt your credit. What happens is part of your credit score is based on your max available lines of credit and what percentage of that you are using. Your best bet is to just keep the card but never use it and occasionally check the balance. Only cancel the card if you have no self control and will eventually end up in debt again by merely having it.

I learned this from listening to Clark Howard (http://clarkhoward.com) which is a great radio show, if he isn't on in your area there is a podcast. Here is a link (http://www.bankrate.com/brm/news/cc/20061114_cancel_card_credit_scorea.asp) i found that explains this a little better.

Actually after going through several major programs taught by credit professionals in the business of raising credit scores I can say that is not entirely true.

First, it is not about the max amount of line of credit that you have. Matter of fact it has nothing to do with the amount of credit line you have. It has to do with having what is called "revolving” or "active" accounts. Having late payments or more debt on that line of credit than you make can actually hurt more.

While closing off your credit card accounts can bring down your FICA score it is far less damaging that having a bad payment history as with most cards if you are so much as one payment late they can raise your Interest to 30%. Most people don't read the fine line of those small printed papers they mail with the application.

Don't be misled by these companies’ desires to keep the general public in debt for the rest of their lives. Credit can be obtained from just about anything nowadays. Cable bills, Cell phone bills, PG&E these all are active or revolving accounts that are reported on your score.

Sure it is definitely beneficial to your score to have at least one active major (open) credit card ,(department store cards carry little weight compared to a major credit card and most home lenders don't count them), for raising your score but once you have obtained those two items that carry the most weight on your score (house and car) you are better off without those income draining cards that will take almost a lifetime to pay off.

$1000 limit...minimum payment....17 years to pay off principle thanks to that good old interest.

It simply is a trap and one to better stay away from.

[masherscf]

A great great uncle on my mom's Dad's side of the family was/is A Grand Wizard. hah

But like I said I don't know anyone from that side of the family.

S'ok dude, my sister's father-in-law is highly placed in a certain paramilitary organization based in the Midwestern United States.

I laugh when I think that his son is the henpecked house husband of the daughter of a communist academic and a homosexual rights activist. At least, I would laugh if that were true.

[gimpbully]

Those crazy, responsible, dad sticking around, hard working white people! Don't you know it ain't kewl to be white yo! Remember folks, it's not racist if it's about white people!

so uh... you're breaking into flat out racism now?
Hiding bigotry in the middle of a plea for equality is completely transparent.

[bigshotprof]

i live in the south too. my wife went out with this big time nazis once or twice.

last week she told him she had married a jew. :D

When did she tell you??!

Ahhh Ha haha. I'm killin' myself!!!

[secret-steve-crumbles]

so uh... you're breaking into flat out racism now?
Hiding bigotry in the middle of a plea for equality is completely transparent.Those crazy racist statistics.

[comhcinc]

When did she tell you??!

Ahhh Ha haha. I'm killin' myself!!!
over the weekend, yeah i am loving it too

[ariastar]

The whole point of credit scores is NOT how likely you are to pay back and how responsible you are. It's a measure of how much interest there is to be made off of you, which is why it helps your score to carry a balance month after month rather than to pay it all off at once. Interest! If it wasn't about interest, then it would look really REALLY good to never use credit. I've used NO credit in years. My cars were bought in full, I use pre-paid everything, etc.. My score is shit for it. Credit annoys the hell out of me.

If in doubt, keep old cards open. You won't be hurt for it.

[phatlip12]

Those crazy racist statistics.

So IF I call you a dick based on a percentage (oh lets say 90%) of things you say it's not me calling you a name. It's a statistic right?! :)






Just saying.

:rolleyes:

[phatlip12]

A great great uncle on my mom's Dad's side of the family was/is A Grand Wizard. hah

But like I said I don't know anyone from that side of the family.

One of my great or great great uncles was an SS men in Nazi Germany.

However.

My great grandfather on the other hand single handedly beat the shit out of 3 men that tried recruiting him to the Nazi party IN THE STATES during WW2. My grandfather lived in a dominant German neighborhood. A guy also lived in the neighborhood that had ties to the Nazi party. He would call my grandfather over and give him candy and tell him to tell his dad (my great grandfather) that he wanted to talk to him. One night the guy (the Nazi) showed up to the house with two other guys wearing swastikas saying something about how my great grandfather had an obligation to assist the motherland or something like that. My great grandfather came out with a pair of brass knuckles on and took care of them. :)

[secret-steve-crumbles]

So IF I call you a dick based on a percentage (oh lets say 90%) of things you say it's not me calling you a name. It's a statistic right?! :)






Just saying.

:rolleyes:Well, you're sort of going all over the place here.

You're forming an opinion, already based on your opinion. I'm saying statistics point to a high probability of something happening. Hell, even your precious Obama agrees with me. Also, who did I call a name?

[masherscf]

You're forming an opinion, already based on your opinion. I'm saying statistics point to a high probability of something happening. Hell, even your precious Obama agrees with me. Also, who did I call a name?

Statistics are not probability. Stats only tell you what did happen, not what will happen.

For example, if the average stock price in a given index rises 99 days in a row, it doesn't predict that it will go up on day 100.

[bigshotprof]

Statistics are not probability. Stats only tell you what did happen, not what will happen.

For example, if the average stock price in a given index rises 99 days in a row, it doesn't predict that it will go up on day 100.

True Dat! Stats do not explain; the merely describe.

[hadees]

Actually after going through several major programs taught by credit professionals in the business of raising credit scores I can say that is not entirely true.

First, it is not about the max amount of line of credit that you have. Matter of fact it has nothing to do with the amount of credit line you have. It has to do with having what is called "revolving” or "active" accounts. Having late payments or more debt on that line of credit than you make can actually hurt more.

You may be right. I'm not a credit professional or anything, i'm just repeating what I learned from Clark which was closing accounts can adversely lower your credit score because part of the cacluation is based on a percentage of the credit available to you that you are using.

Also I don't get how having more debt then you make can hurt your credit more. Obviously having large amounts of debt hurts your credit but when you say buy a house you will always have more debt then you make.

My original intent of this post was just to make sure people knew that canceling your card isn't always the right move.

[masherscf]

True Dat! Stats do not explain; the merely describe.

Stats can be used to support an existing theory of behavior.

For example, the current incarceration numbers are consistent with the conjecture that an American male of African descent is more likely to be imprisoned at some point in their lifetime.

Stats also don't explain cause. For example, I have noticed a correlation between people who fail my class and people with poor attendance. This statistic supports two separate theories. The obvious one is that people who skip class tend to fail the class. The other is that people who are failing the class start to skip.

[ariastar]

Nazis, gays, Jews...Ahhhhhh, it's good to be back online and on Rev3!!

[secret-steve-crumbles]

Nazis, gays, Jews...Ahhhhhh, it's good to be back online and on Rev3!!Here, I'll help you out.

http://i240.photobucket.com/albums/ff99/Bojangles888/close.jpg

[silentspyder]

I don't know who Clark is but Dave Ramsey (another radio guy)says credit is bad. I rarely listen to him because I can't stand his conservative rhetoric but I agree with him on finances.

[bigstupid]

I don't know who Clark is but Dave Ramsey (another radio guy)says credit is bad. I rarely listen to him because I can't stand his conservative rhetoric but I agree with him on finances.

So, what flavor of rhetoric do you prefer?

As to credit... credit is the modern day Pandora's Box. Most of us probably have some kind of credit or credit card horror story and if you don't... just think back to those frequent LSD trips and slap a credit card in its place.