10

I have about 5 department store credit cards that I never use. If I cancel those accounts, will my score improve? Even a little? Again, these aren't credit cards. They're store cards (like Home Depot, Office Max, etc.) If I shouldn't close these accounts, then how can I improve my score? I pay off my one credit card monthly, and my other debts are a mortgage and a car payment.

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    FYI Department store cards are credit cards. They may or may not be with a name-brand bank. They may or may not be reported to the credit reporting bureaus for use on your credit report. – Alex B Aug 17 '10 at 15:49
  • Such a meaningless edit of a 8.5 year old question, @Kat ¯_(ツ)_/¯ – trashpanda Feb 4 at 10:22
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I'm no expert, but my understanding is you should NOT close these cards. They are credit cards even though they've been issued by a store, and will affect your credit score. Some things that the credit score likes are

  • older credit lines that have been around for awhile
  • small or no balances in relation to your total credit line

Your best bet is just to cut them up and forget about them.

If you want to improve your score, NEVER miss a payment on your mortgage, your car, or your credit cards, and dispute any errors on your credit report. Do NOT request too many new credit cards (better to ask for a credit line raise on your old cards).

More reading here: http://articles.moneycentral.msn.com/Banking/YourCreditRating/7FastFixesForYourCreditScore.aspx

  • I think you're right to a point, but since I can never find a true formula for calculating, I just hear rumors. And I've heard a rumor that having a high number of open accounts (even with zero balance) or having too high of available credit can actually reduce your score. It may also have to do with the installment/revolving ratio - credit cards are revolving, which is less desirable to the bureaus. – Joe Enos Aug 17 '10 at 22:26
  • @joe that's because the credit reporting formula is actually a trade secret, so no one is going to publish exactly how it works. – Michael Pryor Aug 18 '10 at 16:02
  • You'd think it would have leaked by now. Lots of people must know it, and I'm sure some people would pay handsomely for it. All it takes is one. – Joe Enos Aug 18 '10 at 17:31
  • @joe You're probably right... – Michael Pryor Aug 18 '10 at 23:10
  • But the actual formula is also getting tweaked over time, so the actual numbers are ultimately meaningless as they'll be quickly out of date. On the other hand, the credit bureaus will freely share tips on improving your credit score through generic "good" behavior, without sharing the specifics. – Benjamin Chambers Oct 28 '10 at 21:46
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You will impact two factors - Average account age. If these accounts are older than your average, you are worse off. If newer, you will increase the average account age and improve your score. Credit utilization. By getting rid of available credit, any remaining balances result in higher utilization. This is counter-intuitive, but part of the stated rating calculation. I discussed the scoring process in an article Your Credit Score, in greater detail.

utilization

I added the above image in response to Patches comment. Nowhere is there a breakout of which card has what. Most of the $20K shown is a zero interest offer that was good for a year, $15K pulled at a one year cost of $50. It was used to pay against a 5% mortgage (since refinanced). The $15K is 100% of that card's line. It's only for the other available credit that my report is not dinged for utilization. Respectfully, I disagree that individual card's utilization affects the score. it's total debt out of total available lines.

  • Along with the higher utilization goes the credit / income ratio. Having too much credit available compared to your income can have a negative effect, so you have to balance that against utilization. – Benjamin Chambers Oct 28 '10 at 21:47
  • Ben - you are right, but this aspect is not a credit score issue. The FICO score does not know your income. Credit to income comes into play for manually approved loans where income is disclosed. – JTP - Apologise to Monica Oct 29 '10 at 2:30
  • @Patches - see my update in my answer and if you have a link or reference, please reply. – JTP - Apologise to Monica Jan 8 '12 at 15:37
  • @JoeTaxpayer well, I remember reading it quite clearly, as it seemed odd to me. However, looking around for a link I'm finding only exactly what you're saying: that it's a ratio total revolving debt to total revolving credit limit. So, it appears I was wrong. I'll delete my erroneous comment. – Patches Jan 10 '12 at 15:04
  • @JoeTaxpayer so the average age is only based on currently open accounts? – user5108 Oct 6 '15 at 3:27
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Closing those accounts can have an impact on your credit score. One of the factors in calculating your credit score is the amount of credit you have already been approved for. So closing accounts you don't use will lower the amount of credit you have available. That should increase your credit some.

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    Source? It's my understanding that it's your debt to credit ratio that raises your credit score... i.e. if you have a lot of credit lines across different cards but carry no balance, you will have a better credit score than someone with no cards. – Michael Pryor Aug 17 '10 at 15:49
  • Wrong. It the number of accounts only has a tiny affect on your score. Having accounts disappear off your record, thus removing credit history, has a far greater effect. Especially if those accounts are the oldest -- in which case you're effectively shortening your credit history. – Patches Jan 8 '12 at 14:49
  • @Patches - here, you are dead on correct. If the accounts are older than average, removing them shortens your history. It also can raise your utilization which is bad. – JTP - Apologise to Monica Jan 8 '12 at 21:29

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