Warning! Closing credit cards you don’t use could lower your credit score.
Do You Have Unused Cards Like Jesse? Learn From His Mistake
How many credit cards do you own? Jesse had six credit cards: Alaska Air Visa, MasterCard, Sears, Home Depot, Paypal, and Target.
He read that only three credit accounts are needed to qualify for the best conventional loan. He also read that three credit cards are optimal for achieving a high credit score. So he took a look inside his wallet to see which cards he could get rid of without missing anything.
He quickly identified Sears, Home Depot, and Target as unnecessary. He almost always used his Visa for everything anyway, because he liked racking up the points for free flights.
So, he called customer service at the three store cards and instructed them to close the cards “at consumer’s request.”
Consequently, his credit score dropped by 15 points. Jesse was stunned and dismayed!
Length of Credit History Accounts for 15% of Your Score
Jesse’s Sears and Target cards were five years old. His Home Depot card was four-and-a-half years old.
His Visa and Paypal cards were both less than two years old.
By closing out three long-standing cards, Jesse had lost points for longevity.
What Should You Do With Old Credit Cards You “Never” Use?
If you have a major credit card with a bank or credit union, you should use that for a small random purchase (grocery item, gasoline) once every quarter to keep it active and prevent the bank or credit union for shutting it down.
On the other hand, individual store cards remain open indefinitely (most of the time). Even if you don’t shop at Sears for three years, Sears keeps your credit line open in hopes that you might stop in and shop a sale.
There is no harm to your score in keeping old, unused cards open.
If you don’t want to handle the cards, cut them up, shred them, or burn them; but whatever you do, don’t call and instruct the creditor to shut them down! Keep those “long history” cards working for your credit score.
For more vital information about building A+ credit in the shortest amount of time, see here.
Thank you for reading this post. My aim is to help good folks achieve A credit and gain respect in the community.
National Credit Care did a study and discovered that people with low credit scores paid on average $200 more per month for auto financing than those with top tier credit.
Let’s look at how much more your car costs based on the financing terms:
$200 per month x 60 months = $12,000 more for the car
$200 per month x 36 months = $7,200 more for the car
How does that make you feel to pay $12,000 more than the last customer, all because of that three-digit score called FICO score or credit score?
What could you do with that extra $7,000 to $12,000 if you weren’t shelling it out in interest to the wealthy finance company?
But that’s not all!
On top of paying more in financing, you also pay a higher insurance premium for having a low score — even if you have a perfect driving record.
That’s right! Insurance companies also check credit scores as part of their determination on how much to charge you for insurance.
And don’t get me started on credit card interest rates…! I’ll save that for another article.
Take control of your credit! Review and repair. Even if you can’t fix everything, you can raise your score and keep more of your hard-earned money in your own pocket.
I don’t know about you, but I can think of a lot things to do with $7,200 to $12,000! Grab yourself a copy of Repair Your Credit Like the Pros here and get started today.
If you know someone who is thinking of buying an automobile, please pass on this information to them, because no one needs to throw away good money on higher interest rates.
Does credit repair work? YES
Is credit repair a scam? NO, not when you do it legally like the certified, licensed, credit repair specialists.
One of my book readers recently sent me this, showing her success.
Previously, her credit report had a charge-off from Verizon that she did not agree with. She challenged it and won! This letter from Experian shows the results and outcome: “Deleted – This item was removed from your credit report. Please review your report for the details.”
She was so happy, because having this negative item removed from her credit will boost her score. I cannot predict how many points her score will go up, because it varies depending on the person’s overall credit report. That said, having a charge-off removed is a major success!
Congratulations, dear book reader, and thank you for giving me permission to post this as an encouragement to others that DIY credit repair works.
All the steps on how she did this are in Repair Your Credit Like the Pros: How credit attorneys and certified consultants legally delete bad credit and restore your good name. You can check it out here.
Please share this encouragement with others who either need to restore their credit and/or who want to know how the credit system works. I appreciate it so much, and they will too!