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Personal Finances / Credit Cards and Consumer Debt


Subject:  Re: question about credit cards Date:  6/26/2007  10:03 PM
Author:  aj485 Number:  254912 of 312161

Say I have a card I don't plan to use anymore. Is it smarter to just let it lapse on its own and not renew it, or to actually cancel it? Just wondering about FICO...

From a FICO score standpoint, it's probably better to keep it open and use it once every 3-6 months or so for a small purchase. This will continue to count the credit line in your debt to credit ratio. In general, the smaller the ratio, the higher your score. Each month you keep the account open will also increase your average account age - longer is better for your FICO score.

However, if the account is costing you money, as in an annual fee, or no grace period when you make a purchase, then it's probably better to close it.

If you decide to close it, you need to actually close it. Just letting the card go past the expiration date does nothing to close the account - it just means that you can't use that particular card anymore.

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