Closing credit cards- how does it affect your credit?

I saw the ad on imamother in regards to getting 100k miles from Amex- accordint to the instructions you can cancel the card once you get the miles like this you dont need to pay the annual fee of $450. My question is how it will affect my credit? or if Im not planning to renew the card next year does it make a diff if I cancel it now, or wait till the year is up? (I dont really need the benefits- so thats not a reason to keep it)

Platinum Member Joined: May 07 2008 Posts: 8963

Having multiple credit cards downgrades your rating because each credit limit is considered a potential debt even when you have no outstanding balance. Repeatedly opening and closing accounts counts against you, though not as much as having the credit company close your account for bad behavior. Having one credit card for a long time and consistently paying it off counts in your favor, so you're better off sticking with one card than skipping around getting cards for short-term deals and then closing them out.

Senior Member Joined: Jun 21 2010 Posts: 176

closing credit cards are supposed to negatively affect your credit score.

Senior Member Joined: Dec 11 2008 Posts: 133

Closing credit cards can affect your credit rating negatively. How much depends on how long you've had the card and how large of a credit limit you have on the card.

It is never a good idea to close your oldest credit card because your score will be higher if you have a longer credit history.

Its also good for your credit score to have a higher credit limit - its always better to be using a smaller percentage of your credit. - ie - if you regulary have 3K of credit card bills outstanding then your score will be higher if your total limit (betw. all of your cards) is 30K and not 6K. The recommended is never to have bills of more than 10% of your credit limit.

If the two above points dont apply so much it'll probably only affect your score within the next 6 months.

You can also ask Amex if they would switch the card to a no annual fee card.

I am seeking someone knowledgeable regarding these issues closing multiple cards ets... A financial advisor, I guess? Does anyone have someone to recommend?

How about fixing or building my credit? How could that be done? I had a small balance by a company (that I was unaware of)and they reported me to a collection company. And I can't get rid of my bad credit now.

go to dansdeals, he explains it all. Do a search on his forums.