What I am concerned about is the ramifications of canceling two four or five credit cards all at once. Over the years I have read several articles on this subject with each article eluding that such action would have a negative impact on one's credit rating/score. Unfortunately I can not remember the reason why. Hopefully someone is aware of these issues and can offer guidance to us all (again). Thank You, -Bill
Re: Canceling unwanted credit I don't believe closing several accounts reduces score per se. But think of the indirect consequences: 1. It would change your ratios (debt/available credit and income/available credit). The latter is not a FICO component, but still matters. 2. It may shorten the average age of your open tradelines. 3. If you close 6-12 month-old accounts, it would show that you're not as profitable a customer as some lenders want to see (this one is a new "profitability" score which is unrelated to FICO). I now believe that given the negative effect, in the long term it is better to dispute & remove even $0 balance closed R1 accounts that were only open for 6 months or so. Saar
Re: Canceling unwanted credit It affects your debt to limit ratio. Assuming you still have other revolving credits and no balance on these, your score will actually improve. However, if you carry a debt, then try to have enough line of credit to maintain this ratio.
Re: Canceling unwanted credit saar, why would closing an unused account make a difference as to profit? I mean can't they see the account hadn't been used in over 8 months and still assume that you're not a profit maker? I guess I'm confused by all this.
Re: Canceling unwanted credit That may be true, but the current new score employed tries to predict the odds of the consumer closing the account he's applying for within the first 6 months. There may be several consumer types they're trying to avoid. One of them is probably rate shoppers, applying solely for the introductory APR or balance transfer offer, and when done repaying, they close the account. Saar
