Credit Score Question

[PrincessCooper's Mom]

Okay I am wanting to buy a car in the next couple of months. I have a credit card that has a large credit limit but a zero balance. I have heard that cancelling it will hurt my credit score and I have also heard that cancelling it will not affect my credit score. I dont want to do anything to hurt my credit score. I have good credit so I dont want to do anything to hurt it. I prefer to do what is going to make my credit score better. What have you heard or experienced?

Thanks for sharing!!!

 

[bigmamimia]

From what I have heard it will hurt your credit. If you aren't spending anything on it and have a zero balance why cancel it? Cut it up if you want but I wouldn't cancel it. I think you can even improve your credit score by using it every once in a while. I am not a professional but I do have a very high credit score and I have many credit cards that I never use.

 

[wiigirl]

Cancelling any form of credit will hurt your credit.

 

[Shelly F - Ohio]

Keep the card DONT cancel it. It show you are a responsible person by having a card with a large limit yet you owe nothing on it. Keep it.

 

[PrincessCooper's Mom]

Thanks for all the information.
Does it matter that I just paid it off in October when we refinanced house?

 

[MrsDrewsky]

Be sure to use it once a year so the credit card company doesn't cancel it. We always use our paid off credit card on my birthday as a way to remember to do so.

 

[MrsDrewsky]

Thanks for all the information.
Does it matter that I just paid it off in October when we refinanced house?

Paying it off will generally increase your credit score.

 

[Cheshire Figment]

One of the major factors in computation of the credit score is the utilization percentage.

Let's say that you have five cards, each with a $5,000 limit. That gives you a total of $25,000 in limits. If you have $5,000 in balances you are utilizing 20% of your limit. If you close one of the cards you total limits go down to $20,000 so you are now using 25% of the limit. And if you close two more your limits are down to $10,000 and you are using 50% of your available credit.

 

[aclov]

I was talking to a banker about raising my score and mentioned canceling a credit card, she said not to do it! Just carry a zero balance on it

 

[TheRustyScupper]

1) FICO is a really misunderstood calculation.
2) Rather, unable-to-be-understood.
3) The actual calcs are a closely held secret.
4) But, to address your particular questions
. . . credit cards carry more weight than store cards
. . . the more "max'd out" a card is the lower the score
. . . however, both cards can be mitigated by how long you have the card
5) Some examples:
. . . good: $1,000 balance with $10,000 credit limit
. . . worse: $9,500 balance with $10,000 credit limit
. . . good: had the card 10-years
. . . worse: had the card 8-months
. . . good: lots of credit cards with low balances
. . . worse: few cards with high balances
. . . bad: being more than 30-days late on card(s)
6) Confusion - all three agencies use a hybrid credit score.
7) ONLY FICO IS FICO.

NOTE: The above is valid, except when buying autos, Auto loan
companies use a different scoring system. It is "FICO Auto Industry
Option Score". It uses FICO, but puts more weight on car loan/lease
histories, even if your FICO is terrible. It heavily counts car purchase
past histories, number of past car loans, missed payments, repo's, etc.
So, you could have a mid-500 FICO and still get a decent auto loan,
even with a bankruptcy. That is why your neighbor with ugly credit
can drive the brand new car, while you rumble along with a clunker.

 

[mel&me]

great Info
Thanks

 

[Egdisney]

It helps your credit score because it gives you a lower credit to debt ratio. It also gives you a longer credit history which is important when factoring a credit score. Keep it, unless of course you never plan to take out another loan and live debt free. I am pretty sure credit reports don't show when a card was paid off, they just show the balance as of the last month. There is an awesome FREE website called creditkarma.com that tracks your credit score and information and has the best credit cards and loans for you. These probably aren't complete and you would want to shop around, but they give you a jumping off point.

 

[Lassie Lynne]

Credit reports do show when you last made a payment, so if you paid off a card, carry a zero balance, then it will show your last payment.

Also, better to have two credit cards with using 25 percent of available credit, then one with half credit available.....even if the amount is the same dollar amount owed.

I never have got all credit things figured out, we just pay one off, and keep another with small purchases that we pay off every month, but always make a purchase, this will build up our credit better, especially if you know your bank reports monthly to the bureaus.

 

[j's m]

DH just opened a Best Buy/Capital One credit card when we bought appliances. The report we got back from them said "Key factors that adversely affected your credit score were limited satisfactory credit history, limited age of credit and insufficient active accounts or debts reported"

We paid off our mortgage over 10 years ago so that completely dropped off, do not have a car loan, paid off a business loan against our house 10 years ago, have only 7 credit cards that get paid off monthly and our oldest credit card is from 1977.

I guess we need to get more debt and more credit cards to raise our score.