Credit Card Experts here? :D

[spt60]

Hi,

I'm a college student. I want to cancel couple credit cards I had which I haven't used for a while. They all have 0.00 balance and no pending charges or fees. One of the cards that I want to cancel is my 1st one i ever had, which has only $650 balance and really high APR.

However I heard a lot that you should not cancel your 1st credit card that you own because it will really hurt your credit? Is it true and how bad does it actually hurt? How about cancel a card that's not your 1st?

I'm an excellent credit card user, never had to pay any APR or interest or any fees ever.

Thanks!

[jdhurst]

I am in Canada, not the US, so what I say may not apply in the US. Credit ratings are based on a score that takes into account several things. From what I can see, cancelling your first card and continuing to use one you prefer should not affect your credit rating. Actually, if you eliminate all but one or two cards (say keep Master Card and Visa) and use them impeccably, then you should not have difficulties.
... JDH

[hart22]

For one of the 3 main US credit rating agencies (not sure if Equifax, Experian, or Transunion), canceling a credit card will come up as a "possible fraudulent activity warning" or the like. I canceled a card a while back and this showed up. Only one of the agencies does this, and if you go into the detailed report next to that warning it will have a disclaimer to the effect that the warning might be a false positive, and really represent a legitimate action. Bottom line is given your situation, no balance on the card etc. (which was same as my situation although it wasn't my first card), it should not affect your credit score or ability to secure credit in any way whatsoever. It is, after all, a legitimate action on your part, and I don't think agencies expect people to keep old, unused accounts open indefinitely.

[ajkula66]

Don't do it.

Lower the number of active accounts vs. the closed ones, lower the score.

The creditworthiness counts since the day you opened the first account, and that's the one you don't want to cancel, even if you never use that card again.

There's more to this issue, but the bottom line is, more "clean" accounts you have, better credit score you'll have.

Hope this helps.

[jdhurst]

Don't do it.

Lower the number of active accounts vs. the closed ones, lower the score.
<snip>

This is why this stuff gets messy and there is no clear answer.

Most of you would have figured out that I am older than a few of you in here. I have many more closed accounts than open accounts (because I have lived longer and lived in two different countries with two different banking systems). I have no issues with credit score.

Remember also that any real or perceived black mark drops off after six years. And also remember that if a company makes a false assertion about you, the credit agency is obliged to make amends. Whether they do or not is up for grabs, of course.
... JDH

[spt60]

Thanks for your replies. Anyway I canceled 2 and kept 2, let see how this goes. This will be a good experience.

Please keep the advise coming if you have such experience.

spt60

[mattbiernat]

Remember also that any real or perceived black mark drops off after six years.

so what about those letters that you get threatening you that if you don't pay this and that "we will report you to collection agency and leave a permanent damage on your credit"
so is the damage permanent or does it only last 6 yeras?

[ajkula66]

jdhurst wrote:

This is why this stuff gets messy and there is no clear answer

.

Agreed. I was just speaking from my own experience, which I'll describe in detail later.

jdhurst wrote:

Most of you would have figured out that I am older than a few of you in here. I have many more closed accounts than open accounts (because I have lived longer and lived in two different countries with two different banking systems). I have no issues with credit score.

All of the above is definitely a big part of the puzzle. Credit score rules have changed over the years. Being of a mature age, and having some accounts open for a number of years will offset having the other ones closed.

Mr. Hurst, not to get nosy or that it's really any of my business, but just for the sake of this topic: what's the other country you're referring to as having lived in? How does the credit score from "the other country" affect your credit rating in Canada, if at all?

Here's my experience: until I've moved to USA I've never had a credit card. In early 2007 I've closed down the first one I've ever had, with no issues, balance on it or whatever. Clean slate. Next month my credit score dropped 40 points. The explanation I've received was that:

a) The closed credit card had an unused limit of $15,000 which I don't have access to anymore.
b) That the second credit card that I've kept (for lower rates etc.) had a lower limit and was opened 2 years later, therefore affecting my credit history, and making me a "newer" customer than I actually was.

All of which is...^%&(* IMHO...

Making mortgage payments on time, as well as utility bills is pretty important, but once again, you will likely be punished for deciding to lower the temptation of owning a credit card...

BTW, there is no such thing as "permanent damage" on one's credit. Even foreclosures and bankruptcies have a shelf life of 7 years, at least in USA.

[Phazer]

Credit card free for two years!!!

The longer you go, the easier it gets......

[jdhurst]

<snip>
so what about those letters that you get threatening you that if you don't pay this and that "we will report you to collection agency and leave a permanent damage on your credit"
so is the damage permanent or does it only last 6 yeras?

That question is a big "It depends"

I had a dimwitted lawn care company try to obtain my lawn care business. I told them no. They applied a treatment anyway. Now the laws in Canada say that treatment was free, because I had told them NO.

They put a black mark on my credit rating (one black, many numerous white). Fraudulent on their part, for sure, but nothing ever happened to me.

Within the six year time frame, I changed my credit line (unused, but still a registered mortgage on the house) from a Trust Company that held the original mortgage to my Bank.

My Bank said "there is a black mark on your credit rating". I told them the story, repeated that the offending company was dishonest as well as being dimwitted, and they could either deal with me or I would simply go to another bank. They willingly dealt with me.

Later, after the six years, I wanted to increase my credit line (still unused at that point). No issue, no black mark, nothing said, increase willingly granted.

Even later, one of the big companies allowed a free credit score and I checked my score. All the old, closed accounts were gone, the fraudulent black mark was gone, and only good stuff remains.

While it does not always appear so, especially in the US, the large credit companies are toothless lions if they have (as can be the case) their "facts" wrong.
... JDH

[jdhurst]

<snip>
Mr. Hurst, not to get nosy or that it's really any of my business, but just for the sake of this topic: what's the other country you're referring to as having lived in? How does the credit score from "the other country" affect your credit rating in Canada, if at all? <snip>

The "other" country I lived in for a few years was the US. I carried US credit cards, and had a mortgage on real property with a US Bank. That was over twenty years ago and has no impact on my Canadian affairs. ... JDH

[Stevesoura]

jdhurst wrote:

BTW, there is no such thing as "permanent damage" on one's credit. Even foreclosures and bankruptcies have a shelf life of 7 years, at least in USA.

Do you think this applies to speeding tickets and warrants?

[ajkula66]

Stevesoura wrote:

Do you think this applies to speeding tickets and warrants?

Speeding tickets, yes. Warrants, no.

The "shelf life" of speeding tickets is three years to the best of my knowledge, no clue about the warrants, but from what I'm gathering quite a few of them, especially federal ones, are timeless...

[RealBlackStuff]

I am new to this country (Sept. 2007) but already I get inundated by offers for free credit cards, cheap CCs and expensive CCs.
I keep my Irish CC for eventualities, because I have a much higher limit there than the piddly sums they offer a noob here in the US (like $500.- a joke...).
I lived in various other countries before and the lowest CC limit I had there was over $15'000.- per card. I was self-employed, but that did not bother the banks!
I'm only using a US issued Capitol One CC actively at the moment, to establish a credit rating here, although I don't think I need one. For daily expenses I just use a Debit card on my checking account.
We have no debts whatsoever, house and cars are paid for.