[Haywood]

It's taken me a few years since my divorce to pay off all my credit cards. (Freedom isn't free!). I am now in a position where I am only using my AMEX and paying that off each month. My credit score is almost at 800 which I'm pretty happy about. I need some advice on what to do with all the credit cards I have. I read that it's not good to close them all out, however, the one thing I get dinged on my credit report is the amount of credit available. So, the question is do I get rid of the cards or reduce the amount of credit on each card to it's minimum? Which is the better practice for your credit score? Thanks for the advice in advance.

[mikex25]

More credit cards can increase your overall limit, it reduces your balance to limit ratio, which can positively effect your credit score. However having very low balances on a few cards like you do now, allows you to also have higher scores.

if those cards don't have an annual fee, you don't need to close them out.

[TheMidnightNarwhal]

Closing your cards with a balance of zero on them will not affect your score.

Personally, I like to have just one card with a higher limit. I had three 300$ limit cards before and now got a 2000$ limit card and closed the others.

[Haywood]

Ok. Two different opinions. This is what I've been getting all along!

[Haywood]

Originally Posted by mikex25

More credit cards can increase your overall limit, it reduces your balance to limit ratio, which can positively effect your credit score. However having very low balances on a few cards like you do now, allows you to also have higher scores.

if those cards don't have an annual fee, you don't need to close them out.

Thanks. Would you recommend reducing the credit limits on those cards?

[mbanks21]

Closing a card reduces your amount of available credit. As mentioned above if there's no fee to keep it open why close it?

[nyalpine90]

I would keep them open, and just check them on monthly basis for fraud.

[Haywood]

Originally Posted by mbanks21

Closing a card reduces your amount of available credit. As mentioned above if there's no fee to keep it open why close it?

Thanks. Makes sense. It was feedback I was getting on my credit score that stated I had too much open credit. My goal is to be in the high 800's.

[infinitekidM2C]

I'm not a credit expert (although my score is over 800 - brag) but i believe that having a lot of available credit is a good mark on your credit. Used/Available = lower the ratio the better. I think you're getting marked down by the number of open accounts. Now if i was you i'd keep amex and the card with the highest limit. The Amex and remaining card should probably have been open long enough to keep your "long credit history" good mark ok. Doubt that would hurt your credit. The only reason i'd do it is to avoid unnecessary fees and make things easier to manage because i doubt doing this will help your credit much.

[Axius]

Having a good amount of available credit does work in your favor, but if I'm not mistaken the age of the accounts has a larger impact. With that said, use them minimally to keep them active, and allow them to age. I wouldn't avoid taking out any more, of course, but closing will likely leave you at the same point you're at now, if not marginally better.

[Hawkeye]

Originally Posted by TheMidnightNarwhal

Closing your cards with a balance of zero on them will not affect your score.

Personally, I like to have just one card with a higher limit. I had three 300$ limit cards before and now got a 2000$ limit card and closed the others.

This is 100% wrong.

Originally Posted by Haywood

Ok. Two different opinions. This is what I've been getting all along!

Closing credit cards affects you in 3 ways. It reduces your available credit (having credit is not a bad thing so I am not sure why you would get dinged for it), it potentially reduces your average account life, and it increases your utilization because your available credit is lower.

Personally I would not close a card and if I did it would be just because I was worried about keeping track of all of them and I would do the one I was most recently issued.

I think you have to get WAY up there for available credit to poorly affect your score (I have ~200% of my annual income as available credit on credit cards alone and my score has not indicated anything negative from it)

[tdott]

Do not close any card if it is your oldest card with history.

Try reducing your limit on a few cards first. Then look at closing any newer cards if needed.

Congrats on the freedom!

What is your end goal? What do you plan on doing with that high score? After a point it doesmt really matter what your score is.

[c1pher]

I went through something similar in my divorce. Ten years later my score is 809-864. I keep all my cards but haven’t opened any either. I have some fairly high limits on some of them, like $50k and $30k so keep them around just in case I have a huge emergency.

[TheMidnightNarwhal]

Originally Posted by Hawkeye

This is 100% wrong.

No. You credit history is only 15% of you fico score. And even closed cards keep contributing to your average age of accounts until 10 years is passed.

https://www.reddit.com/r/personalfinance/wiki/fico

[jgoens]

The way to increase your score is to have a card, use it for everything and pay off almost all the balance each month. You will pay interest each month but what increases the score is demonstrating that you can have debt and always pay on it. I learned this from a credit guy. I currently have a score of 820( have been at that or higher for ten years) and used this method for my wife and got her score to 790.
That only applies to the score and not how large a loan or credit you are qualified for.

[Hawkeye]

Originally Posted by MGM135is

I went through something similar in my divorce. Ten years later my score is 809-864. I keep all my cards but haven’t opened any either. I have some fairly high limits on some of them, like $50k and $30k so keep them around just in case I have a huge emergency.

Originally Posted by jgoens

The way to increase your score is to have a card, use it for everything and pay off almost all the balance each month. You will pay interest each month but what increases the score is demonstrating that you can have debt and always pay on it. I learned this from a credit guy. I currently have a score of 920( have been at that or higher for ten years) and used this method for my wife and got her score to 890.
That only applies to the score and not how large a loan or credit you are qualified for.

Perhaps talking about what rating scale people are talking about would help. FICO 8 only goes to 850. Also you shouldn't pay off "almost" all of your balance. You should pay your entire balance each month so you are not paying any interest. As long as you have a balance near the end of the month (when most companies report to the bureaus) it will still count towards you utilizing.

Originally Posted by TheMidnightNarwhal

No. You credit history is only 15% of you fico score. And even closed cards keep contributing to your average age of accounts until 10 years is passed.

https://www.reddit.com/r/personalfinance/wiki/fico

edit: I see you meant Length of History and not "credit history" so I'll update my post accordingly.

15% would only be 82.5 points. Having 82 points based just on the length of history is pretty significant.

FICO doesn't release their proprietary formula so any % impact from any one criteria is purely a guess. There are also different scores based on what you are applying for credit wise (house, car, credit card, etc). I am also pretty sure it is closer to 5-7 years that credit accounts drop after they stop reporting to the bureaus.

I think it is good you're on finance forums and whatnot, but perhaps you should pay more attention and not tell people closing cards will have no effect. Maybe if they are relatively new cards with $300 limit but some of us have $30k+ average card limits and that does have a big effect.

[3 Stripes]

Originally Posted by jgoens

The way to increase your score is to have a card, use it for everything and pay off almost all the balance each month. You will pay interest each month but what increases the score is demonstrating that you can have debt and always pay on it. I learned this from a credit guy. I currently have a score of 920( have been at that or higher for ten years) and used this method for my wife and got her score to 890.
That only applies to the score and not how large a loan or credit you are qualified for.

920? What kind of witchcraft is this?

[Matt@EuroJerks]

What do you guys do with store cards? For example I bought a pottery barn couch with their zero interest CC. I just paid it off before the year is up. What should I do? Open or close?

[UncleWede]

Originally Posted by Matt@EuroJerks

What do you guys do with store cards? For example I bought a pottery barn couch with their zero interest CC. I just paid it off before the year is up. What should I do? Open or close?

You should give up your man-card for admitting to having a pottery barn cc

[Doc Oc]

Originally Posted by jgoens

The way to increase your score is to have a card, use it for everything and pay off almost all the balance each month. You will pay interest each month but what increases the score is demonstrating that you can have debt and always pay on it. I learned this from a credit guy. I currently have a score of 920( have been at that or higher for ten years) and used this method for my wife and got her score to 890.
That only applies to the score and not how large a loan or credit you are qualified for.

I'm lost, 850 is highest possible, no?

[infinitekidM2C]

Originally Posted by UncleWede

You should give up your man-card for admitting to having a pottery barn cc

he'll end up keeping it open; gotta shop for accent pillows

[Hawkeye]

Originally Posted by Matt@EuroJerks

What do you guys do with store cards? For example I bought a pottery barn couch with their zero interest CC. I just paid it off before the year is up. What should I do? Open or close?

Keep it open, they will close it for inactivity after a while on their own. Only reason to close a card is if it charges a fee and cannot be product changed into something without a fee.