Cancelling credit cards VS. leaving them at a zero balance???

I am trying to get out of debt while at the same time raise my credit score. When I pay off my credit cards, will it hurt my credit to cancel my cards? What about just leaving them at a zero balance? Thanks.

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  • 1 decade ago
    Favorite Answer

    This is a difficult question. While I generally agree with sonrisa (above) her answer is a little off-point. The factors to answer your question are two: 1) How many credit cards do you have/how much is their limit. If you max out a card, there is no doubt that it will push down your FICO score. Once a card drops below 50% of its available balance, it is probably neutral. Cards that have low (or no) balances will indeed push your score up. To a point.

    Fico scores also take into account the total amount of credit available to you. If you have just two or three cards your score will almost certainly rise. However, if you have a whole drawerful of cards (like 10 or even 15) with a zero balance that will likey push your score DOWN. Fair Issac looks at it this way: what if you went to town and drew them all down at once...

    The second, and much bigger point, is that if you close a card with a long track record of having made payments on time, you are dropping that good piece of credit out of your score. Again, if you have 15 credit cards this can be good. But, if you are like most people with half a dozen cards, if you can pay it down to zero, that will raise your score. Only if the card is still open however...

    Lastly, because your credit score works on a moving average over time, move slowly. Since you have no immediate need to raise your score, you will maximize your FICO by not shutting several cards at once. Work on paying off cards with the highest interst rate first. Work on paying down one card to zero (or at least below 50%) before moving on to the next, i.e., don't try to pay them all down at once. Good luck!

  • acuna
    Lv 4
    4 years ago

    Zero Balance Credit Cards

  • 1 decade ago

    The credit score is based on multiple criteria, one of which is your percentage of available credit. If you keep the cards open at a zero balance, and choose one to use let's say to buy gas, and then pay-it-off in full every month you will be increasing your credit score. You'll be amazed at how high it jumps just by paying-off the cards.

    Get a copy of your credit report if you haven't already to make sure that you don't have any collection accounts that you didn't know about. You'll also want to look at the rest of the "derrogatory terms" section because this is what has the most impact on your score. These terms can stay there for a period of seven years, so it may take that long to have a great credit score if you have had any late payment history.

    Good luck! I'm going through the same thing!

  • Anonymous
    6 years ago

    Cancelling credit cards VS. leaving them at a zero balance is something of a hot topic on this site. People will go on and on debating whether this way or that way is the way to convince othhers that one or the other way is better. In reality it makes no difference as you did zero, whatever you did it still amounted to zero. You close them? not sure you are good with other people's money!!! You are not using them? not sure you are good with other people's money!!!

    RE:

    Cancelling credit cards VS. leaving them at a zero balance???

    I am trying to get out of debt while at the same time raise my credit score. When I pay off my credit cards, will it hurt my credit to cancel my cards? What about just leaving them at a zero balance...

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  • 1 decade ago

    Yes, you should leave your cards open with a zero balance. You will get penalized for closing accounts with a zero balance, at least as long as you have other accounts with positive balances. That's because your CC debt as a percentage of your total credit limit is a big factor in your credit score. Because of that, you want to keep your credit limit as high as possible while you are paying down your balances.

  • Anonymous
    5 years ago

    So exactly where do you shop for your apparently high class taste. J C Penny have been in business for 109 years. They have stores in every US state and are well respected nationwide. Just return the card to the provider. However, this will be recorded on your credit report as you are obviously an indecisive person (signing up for a card and immediately changing your mind)

  • 1 decade ago

    I've heard that keeping a zero balance is better for your credit score, since you'll be using less of your available credit.

    Source(s): here's a site that mentions it http://www.bankrate.com/brm/news/cc/20061114_cance...
  • John H
    Lv 4
    1 decade ago

    Part of your credit score is based on prior loans and credit card payments. If you cancel this you score will go down.

  • Anonymous
    4 years ago

    Good question, I was wondering the same thing myself

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