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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308232  
Subject: Re: Extra Credit Cards Date: 10/17/2005 3:29 PM
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Inactive cards do not hurt you at all. To the contrary they can help you.

In fact, cards that are inactive more than 6 months aren't counted at all for anything. So closing them or keeping them laying around is identical. The only reason to cancel one is 1) if you feel like it, or 2) if they charge you a fee (definitely cancel it then!).

One big factor in your credit score - probably after length and on-time credit history - is utilization ratio. That is, your average balance is $X and your total credit limit is $Y. X/Y is your utilization ratio. The lower that ratio, the more responsible you look credit wise.

So if you have some inactive cards, you could consider using them once every 6 months to keep them active. Then, for the 5 other months, it adds to your Y, but not your X. And if it's just one small charge, even that one month you used it, it still helps your utilization.

A particular incentive to do this is if it's your oldest card. If this is the case, keeping it 'active' not only helps your utilization, but also extends your credit history further back, which also helps your score.

But if you don't want to bother with all this stuff, just close them. If you continue to pay responsibly, on time, and use a reasonable amount of your credit, you'll be just fine.
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