Should I close low-limit cards to improve credit age?

Should I close low-limit cards to improve credit age?
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#1

Hello,
I currently have about 25k in credit limits across 10 cards. Four were opened just over a year ago which gave me limits of about $1000 each. I kept them to help for the 0%interest on balance transfers, but have now paid almost everything off with the proceeds of a loan.

If I close these 4, will it help my score due to average age of account? Also another loan was opened at the same time and now is paid, but hasn’t been reported paid, (or closed). Should I report it closed to help credit age, or will that hurt?


#2

My God, don’t do anything, other than perhaps asking for credit line increases on the oldest cards you have. Keep in mind that most banks won’t even consider raising your limit unless the card is at least a year old, so don’t bother asking.

Ten credit cards is more than enough? If you do apply for more, apply for only 1 new card every 6 months at minimum.

With regard to your loan. You don’t report it paid. the lender will do that. Be patient.


#3

Hi, danielnv, and welcome! Closing accounts typically can’t improve your scores and may hurt them. Having several open credit lines in good standing is a positive for your scores.

There are times when you may want to close card accounts, such as when you’re being charged an annual fee for an account you don’t use or when you’re trying to simplify your finances. But if you’re building credit toward some goal, such as getting a mortgage, it’s best to wait until after you’ve achieved that goal before closing anything.

Hope that helps, and please let us know if you have any follow-up questions!


#4

I would definitely wait on closing any cards. And depending on what companies you are doing business with, it is possible no matter how low your balances that you might be eligible for an increase or in a position to mature them a little more and get an increase.

For instance, if any of your cards are Bank of America, increases are now all soft pulls so you will no be adding any inquiries if you ask for a higher limit. I wouldn’t ask for more that doubling it and you would know if you had a chance by logging on to your homepage to see if the increase link is there. If they do deny you, wait 3 months 1 day and repeat. This will not hurt you as these will continue to be softballs.

Some people have a number of cards issued by Comenity - store cards usually. These have historically been soft pulls to get a CLI. If you have any of those in your portfolio it might be worth a look but I definitely agree you want to be over a year in age before you give it a go.

Also, don’t be in a hurry for your loan to report at zero. You will temporarily see a drop in your scores - that’s the way Fico always deals with paid loans but you’ll bounce right back to normal with time.