Some good advice here.
So good it's a shame some of you guys aren't heading to Congress to get this nation straightened out.
As we all know the current blue suits are killing us!!!!
Just curious about something that keeps getting mentioned.
Why does cancelling a cc that no longer carries a balance hurt your credit??
I was fortunate to pay off my home last year and my truck the year before that and was actually contemplating getting rid of three of the four cc's i currently own.
Now i dunno??
Explain please.
The way I understand it, it's about your debt to income ratio, and the percentage of your available credit.
Say you had $10,000 total limit in four credit cards. You have one card run up to $2,000 but the banks can see that you have $8,000 available credit. Your percentage of credit available to credit used is 80%/20% or 4:1.
Now, if you cancel three of those cards, you have $2500 credit, and you have the same $2,000 charged. Your credit is now almost 1:1 which is bad, because you have almost maxed your available credit.
I've heard it explained also that a card is considered negative to your credit when the total balance at time of checking is over 50%. It's considered "maxed out."
So if you have $2,000 spread across all four of those original credit cards in $500 chunks, you look much better than if you have one card with $2500 available and $2000 charged.
Make any sense?
