arlyh
Jul 25, 07, 8:55 am
I have a 10-12 visa and mastercards. Since I mainly use about 4 of them does cancelling 2-3 of them affect my creditrating?
Credit Card Programs - credit cards
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brp
Jul 25, 07, 8:57 am
Yes.
Cheers.
Cheers.
grahampros
Jul 25, 07, 9:38 am
I have a 10-12 visa and mastercards. Since I mainly use about 4 of them does cancelling 2-3 of them affect my creditrating?
Yes, canceling the cards will lower your credit score. It will reduce your amount of available credit, hence raise the % of your outstanding credit used. % of available credit used is one of the biggesst factors in calculating credit score.
Depending on the relative age of the accounts, it could also ding your credit score by lowering the average length of your credit history.
If these are no fee cards, and you don't have problems running up every credit card you have, you're propably better off keeping them open from a credit score perspective.
Yes, canceling the cards will lower your credit score. It will reduce your amount of available credit, hence raise the % of your outstanding credit used. % of available credit used is one of the biggesst factors in calculating credit score.
Depending on the relative age of the accounts, it could also ding your credit score by lowering the average length of your credit history.
If these are no fee cards, and you don't have problems running up every credit card you have, you're propably better off keeping them open from a credit score perspective.
JDiver
Jul 25, 07, 9:54 am
Since this has nothing to do with American AAdvantage, it has been moved to a more appropriate forum.
To see more about how canceling credit cards may affect your credit rating / FICO Score, look at Fair Isaac's consumer website at www.myfico.com. I'm not recommending any of their products, but the documents and information available online tell you about your FICO score, and the FICO algorithm or a knockoff is what credit reporting agencies use to issue you a credit score.
In particular, study and learn this:
http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx
You might also want to visit the websites of the credit reporting agencies themselves:
www.experian.com
www.transunion.com
www.equifax.com
You can order one free credit report per year per CRA from this site:
www.annualcreditreport.com
You do not have to buy anything or pay anyone for your credit reports - you are entitled to an annual one for every one of the three major CRAs, and some folks get one every four months (alternating CRAs.) Beware other sites offering free credit reports but trying to sell you products, including the three CRAs themselves.
That's the difference anyway? Well, say you want to buy a home and after a down payment you secure a 30 year fixed rate mortgage of $216,000 (yeah, I know, very low, but let's just say...)
FICO score of 760 - 850 you might have received last year a 6.30% rate, with a monthly payment of $1,337
FICO score of 620 - 639, it would have been 7.89% and a monthly payment of $1,568.
At the end of thirty years, the person with the 620-639 FICO score would have paid 38.5% of the home cost, $83,160, MORE than the person with the FICO score of 760 - 850, who will also qualify for those sometimes elusive no-interest car loans, etc. while the person with the lower score will likely not.
So, canceling a card with a low limit that you have had a short time will have less impact than canceling a high limit, low balance or paid off monthly card you have had for a number of years, for example. It's more complex than that, but read the websites, and proceed accordingly.
To see more about how canceling credit cards may affect your credit rating / FICO Score, look at Fair Isaac's consumer website at www.myfico.com. I'm not recommending any of their products, but the documents and information available online tell you about your FICO score, and the FICO algorithm or a knockoff is what credit reporting agencies use to issue you a credit score.
In particular, study and learn this:
http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx
You might also want to visit the websites of the credit reporting agencies themselves:
www.experian.com
www.transunion.com
www.equifax.com
You can order one free credit report per year per CRA from this site:
www.annualcreditreport.com
You do not have to buy anything or pay anyone for your credit reports - you are entitled to an annual one for every one of the three major CRAs, and some folks get one every four months (alternating CRAs.) Beware other sites offering free credit reports but trying to sell you products, including the three CRAs themselves.
That's the difference anyway? Well, say you want to buy a home and after a down payment you secure a 30 year fixed rate mortgage of $216,000 (yeah, I know, very low, but let's just say...)
FICO score of 760 - 850 you might have received last year a 6.30% rate, with a monthly payment of $1,337
FICO score of 620 - 639, it would have been 7.89% and a monthly payment of $1,568.
At the end of thirty years, the person with the 620-639 FICO score would have paid 38.5% of the home cost, $83,160, MORE than the person with the FICO score of 760 - 850, who will also qualify for those sometimes elusive no-interest car loans, etc. while the person with the lower score will likely not.
So, canceling a card with a low limit that you have had a short time will have less impact than canceling a high limit, low balance or paid off monthly card you have had for a number of years, for example. It's more complex than that, but read the websites, and proceed accordingly.