Quote:
Originally Posted by Christien
"Stashing" a card away might not be a good idea. Depending on your plans for credit in the next few years, it could negatively impact a credit application. If you've got, say, a $20K limit on the card with a zero balance and you apply for a mortgage, the lender will look at that 20K as a debt, because, potentially, you could run out tomorrow and max the card. If it's a small limit like $500, then who cares, but if it's a larger limit, and you might be looking for a mortgage, car loan, etc. in the future then you should consider closing it outright. Then sit tight and watch that cheque for $1 roll in!  |
Not positive, but I think the opposite is generally true. Closing any account that you've had for some time will negatively affect your account history ratio. Also, having a credit card account open with a large limit, but low balance can actually help your credit score, as it lowers your cumulative balances-to-available credit ratio. I applied for a credit limit increase on my primary Visa, and it kicked my FICO up about 10 points. YMMV, but I've always been told never to close a credit account, and to try and keep the balances below 10% of the available credit (limit) if possible.
