It can hurt but not much and not for very long. But I would just keep it and tuck it away somewhere. Having an old and active account helps your score.

freeze it in a block of ice or lock it in your fireproof safe. You may need it some day

what i hate, and maybe someone can answer me along with this is that I got a card and canceled it right away. But it shows up on my credit report and says that it will be listed there for the next 10 years... any way to get that off?

Cancelling a card _can_ hurt your score, but it's important to remember that your score isn't everything that a potential lender will look at when determining what sort of loan you'll get. They'll look at how much available credit you have, as well, so if you have $5,000 in available credit unused on some card that you never wanted in the first place, they may suggest you dip into that credit card rather than add more of a credit line to, say, a mortgage.

The amount that your credit score is hurt by cancelling a card is pretty insignificant. If it is an old card that you've had for a long time, don't cancel it, but something like this -- new card that you didn't want -- it doesn't hurt. I got a store credit line to purchase a new guitar last year, 0% APR for a year, paid off the guitar in about ~8 months and now I'm cancelling the card. Mostly because I have no interest in carrying a card that has a 23% APR (0% for a year, then it skies to 23% which is absurd)

@lodleader: Bigger question is will it hurt you to have that cancellation on there.

If the only two criterion are the ones listed in this article, you don't have anything to worry about with this cancellation being on there since it didn't shorten your history and it didn't lower your available credit (aside from when it was briefly opened).

isn't it true that having too much available credit can hurt your credit score?

So would it make sense to keep cards, make a few small easy to pay the full balance of purchases to keep them active than to get rid of them?

How can people know so little about something that affects so much of their financial life?

It does affect your credit score if you carry balances. Basically, if you cancel a card, your percentage of credit used goes up. This appears to the model that you are stretching yourself.

However, if you never carry a balance, it should not effect your score much/any, as long as you have other accounts. (If you cancel all your credit cards, your score most certainly will go down, because you now have much less contributing to your credit history.)

At one point, I ordered an American Express card (Blue), but when it came in, I never activated it. A year later, I got a letter saying they were canceling my account. I assume this impacted my score a good amount, but does anyone know more? Does it count as a credit card, even though I did not activate it?

@lodleader: no, there's usually no way to get that off, but as long as it states "closed by consumer" & shows paid in full, it shouldn't have a long-term negative effect on your score.

incidentally, i think it's only supposed to report for 7 years (unless it's part of a bankruptcy).

@TinkishDelight officially OVER the dc tourist infestation: You realize that people aren't born with this information and have to obtain it somehow - such as by asking questions - right?

@snowburnt: i don't think it hurts your score, but some lenders may refuse to extend credit to you b/c you pose a higher risk of default due to the higher availability of credit.

It could hurt your score.

Sirwired explained the available credit factor welll. If your % utilization for available credit goes up then your credit score will down. Basically if you lower your overall credit avaialble then your outstanding debt on those credit cards will consume more of your total available credit. Your credit score will reflect that.

The other factors are Oldest Credit Line and Average Age of Credit Line. Removing your oldest card will hurt your credit score based on these factors.

The battle for good credit takes time, patience, and diligence. These are things happen to make you a worthy borrower as well as raise your credit score.

www.creditinfocenter.com

I hate discover card... I *thought* I canceled my account years ago, only to keep receiving mail from them. I called to see what was going on, and they never canceled my card. then I had to go through 30 minutes of a kid trying to convince me to keep the card open before it was finally canceled. I haven't received anything from them since, and my credit reports show the card as canceled. Never again.

If only I had known about Consumerist then... though I don't think it was around during this episode. *sigh*

@rdm: The man claimed to have excellent score meaning that's he's likely already applied for a loan/credit card or two. If you're in the game, it's your responsibility to learn how to play it. He also claimed to be a Consumerist reader. There's a whole tab of credit information.

How soon would be considered too soon when you cancel a newly acquired credit card? (I got a Toys R Us card last year and only used it one time.)

I don't understand why anyone Phil McGraw can solve anything. I saw a magazine at the grocery store check out the other day that said something about him having marriage problems. Who would go to someone for counseling who can't keep his own marriage in good shape??? That would be like hiring someone to fix your car who owns three cars, none of which work.

@Robert Jason Cervantes: I have had a similar situation. Received a Discover card and activated it about a year later, but still have never used it. Wonder if canceling it now would be a bad idea.

Discover has a marketing gimmick, or at least that's what I think it is, that drives me batty. If you haven't used your Discover Card in six months or so, they'll send a new card well in advance of the expiration date of the account. It's like they think if they send me a new physical card, I'll run out to use it. And if you don't bother to activate the card that arrives, look for another one to arrive in the mail within six months. This practice strikes me as wasteful, stupid and likely to lead people like the subject of the post to call and cancel the account in order to stop the mail deluge.

Here's my quandry. I have a low limit ($800) card that carries a $50 annual fee. I got it after some credit problems that are now resolved. I have other cards (one $2500 and one $5000) and I never carry balances. I hate that I have a card with an annual fee. The 'credit life' of this card is about 10 months older than my next oldest card. Question for all - should I cancel it to ditch the fee? I'm not looking to buy a house or do anything else soon, so if it's a small hit on my score I'd be fine with that. Basically it comes down to whether or not the FICO hit is worth getting rid of the fee, which I think it is.

@Robert Jason Cervantes: I'm guessing it counts. They gave you credit when they accepted your application... you just never used it.

However, based on what other posters have said above Re: available credit, etc. it probably didn't hurt you that much.

I think a lot of credit card issuers use this phrase as a scare tactic. Yes, closing a credit card can impact your score. So can applying for a new card. Closing a card should not "tank" your credit score. You should take whatever action you feel will bring you to a greater level of financial health.

About 6 years ago I got a consolidation loan, and closed all my credit cards except for 2 department store charge cards. I then proceeded to make all my payments, and was late due to forgetfulness twice in about 4 years. At that point, I refinanced the consolidation loan and my credit score was "so high" my credit union gave me their very best rate. Last year, I applied for a Platinum card and was immediately approved.

Managing your money, making payments on time, getting rid of high interest rate cards, keeping a low-credit line card active... that gets you a good score. There will be ups and downs but that's just a part of the process.

@chris_d: There's an adage in web design: always hire the designer with the worst site. Why? Because they're so busy helping their clients with their sites, they never have time to fix their own.

Not that I'm defending Dr. Phil or anything...

@lodleader: You opened it, you closed it. Not coming off.

But the good news is, it most likely will have no effect on your credit score or any future credit decisions.

@snowburnt: It depends on the type of credit that you have available. If you have too many "revolving" accounts (credit cards, open-ended lines of credit, etc.) open, then it can adversely affect your score. Even if you carry a "zero" balance on these revolving accounts, the fact that you could potentially rack up thousands of dollars in debt literally overnight is what hurts your score. Just as "mac-phisto" points out, you pose a higher risk because of this, and after all, that's what the FICO score is designed to measure.

I have a couple cards that I paid off but one charges a monthly fee (it's a really bad card) and one charges a yearly fee. I'm thinking I should cancel these and not even look back. Any advice?

@Matt: I think with such a low limit compared to your other accounts that it would not generate much of a hit.

re "David": why the urgency to cancel a card and the angst over doing so? Cut the thing up, but keep the account open. I also have a Discover account, only used for a 0% float, and I paid that off before the rate reset. They send me new cards every six months or so, and I just cut them up. If they want to close the account for non-use, no skin off my ass. I don't obsess over my score much.

@Matt: Cancel it. If there's a hit on your credit score, chances are it'll hurt less than the annual fee. And if the next card is only 10 months younger, it's not going to do much harm.

I had two cards with Chase. They sent me a letter saying they noticed I used one more than the other. So they raised the credit limit on my active card. And then a month later, I got another letter saying they closed by inactive account because I wasn't using it.

So in the end, my available credit was way up. And then after the inactive card was closed, my available credit went back to the same before all this started. So nothing really changed.

I've cancelled cards before with minimal impact if any on my credit score. I say it depends on the rest of your credit picture. If you have a rich history and a good credit limit available on the remaining card(s) you will be ok. I've been down to just a single credit card several times in my life with an available limit of 5-10k and still retained an excellent fico score but I had an excellent track record on the closed cards and on a current auto loan to support that score.

I dont care what the interest is on my credit cards because I use them responsibly and pay off the full balance every month. They could be at 50% and it will never affect my payment. Credit cards are not interest free loans, they are simply a convenient and secure way of shopping online and in stores without carrying filthy cash in your pocket. I actually make money with my credit cards that have cash back/incentives, to the tune of an equivalent 30k MMA account, and that's not small change. That said, never cancel a card unless there is a fee attached, just charge a small amount on it every few months and pay it in full and watch your Fico score rise. It does not matter if you have 5 cards or 50, part of your Fico score (like 30%) is based on your credit to debit ratio. Say I have amassed overall 50k in credit, I would never charge more than 5% of that amount in one month because that affects my ratio. So, buy that bigscreen TV on credit, but make sure you have that amount in your checking account to pay it off within a month. OR as Suze says "you can not afford it". Sorry I ranted a little off-topic but it is my number one peeve with society at large.

@TinkishDelight: Because the credit industry is transparent and easy for everyone to understand, right?

I think there might be a small mistake in thinking here. Credit scores do base themselves upon the length of time you've had credit. But canceling a card does not remove that history from your report. It remains for seven years - ten if it is all positive says my credit bureau rep.

You would be lowering your credit to debt ratio, assuming you are carrying debt. But the reduction to score because of loss of history doesn't make any sense. The history will remain and the card will show canceled by consumer. There'd be a maybe five point hit assuming its not a large amount of available credit that totally whacks out the debt to available credit ratio IMHO.

@DeanOfAllTrades: You need to use them periodically. Small purchases that you pay of monthly. Otherwise, the account may be closed due to inactivity.

its pretty simple.

1. if you haven't got cash - you can't afford the baubles and trinkets. Exercise a thing called 'self discipline.'

2. credit is 'debt.'

3. only people failing at the business of 'making a living' are concerned with whether or not something affects your ability to incur debt.

4. if you're having to use a credit card to buy things because you presently don't have actual currency ('cash') - then you're living beyond your means - regardless of whether its just until the next payday, or longer.

5. see #1.

@Matt: Get rid of that stinky thing!

As said above, you would be alterting your credit to debt ratio by closing that credit line and COULD effect your FICO score, a little.

Sounds more like Discover Card is looking cardholders left and right and is taking some creative methods to try and get them to not close their accounts. I have never seen a credit card company concerned about someone's FICO score when they ask to close an account.

That said, I wouldn't be alarmed. This account was new so it doesn't really impact the part of your score based on how long your account has been open and paid on time.

I have seen people have creat concern about "hard credit report pulls", "soft credit report pulls" and things like this when it comes to their credit score. I think it's much stress about nothing.

I have taken advantage of credit card offers for bonuses and then closed the accounts, I have had my credit report pulled when I am thinking of buying a hard or refinancing my home, etc. My credit score has always remained between 775 - 790. I think people stress too much about this stuff.

You won't wreck your FICO if you cancel a card, even your most long-standing card. You will wreck your FICO if you default on something, or if you foreclose on your house.

Don't live in fear of credit bureaus. (Don't live outside your means if you can help it, i.e you aren't forced to because you're ill, either.)

2) Your credit history may be shortened. Length of credit history is part of your score. The older, the better.

No, your credit history can never be shortened. Your average account age may be shortened, lowering your score.

There's no way to get "rid" of credit history, folks.

@MrFrankenstein: how dare you bring common sense into a discussion here!

@Matt: another possibility: if this is with a major bank, consider having them review your account for a different product that doesn't carry an annual fee - you might end up with the best of both worlds.

or just cancel it - def. not worth $50/yr.

1) Canceling a card may hurt the average age of your account, HOWEVER positive accounts remain on your credit report for up to 10 years, closed or not. So you won't feel the Fico hurt for canceling a card for probably 10 years after you cancel it.

2) No, you Fico does not go down for having too much available credit. Horrible myth.

3) The available limit being taken away from a closed card may hurt if you have balances reporting. Don't carry balances and your utilization will not be hurting your score.

Simple.

No you should not worry about this in relation to credit score for buying items. Maybe worry a little about it for future stuff like car insurance, etc. You may have to proove to the insurance droids that you have open older credit lines.

Credit Geeks who use app-a-rama and other techniques to bust out credit cards to use the Zero% advance money in high yield interest accounts may care but it really doesn't affect the average user. As others have said it is the defaults, late payments, etc that really hammer your credit score...

Excellent advice.

So what about a credit card that carries an annual fee? I don't use the card, but it has a fee of $50 a year. It's the oldest (7 years) and only card I own. What should I do?

@xay: No I get that, but whether or not your score drops if you close a card? That's like Credit Scores 101. Not even. That is like the preliminary class that most kids already test above.

Like I said it's one thing if you're 18-24 and just starting out, it's quite another if you've been utilizing credit long enough to have an "excellent" credit rating. And you're a Consumerist reader!

@FrankenPC: Yes. Sears recently canceled my Mom's very long-standing account for inactivity. I was piggy-backing too, so I'm miffed!

@mac-phisto: Thanks for assuring me my decision was right. I told them when I called to cancel it that my specific reason for canceling was the annual fee. They told me they could knock $10 off of it, but that it had to stay on. Bye bye crappy card!