Cancelling credit card question

[LiNK666]

I'm getting rid of some old cards to free up credit and I was wondering how long does it take from when you can cancel the card to hit your credit saying that the card has been closed etc...

Do you have to request something special when asking your account to be closed in order for it to be removed from your credit report?

[Yamaha_Gurl]

Don't close old credit cards, it can hurt your credit score...feel free to google it.

[REDBALLS]

Give them to me and tell them a week later they have been lost for a week; then cancel them. I need some Gucci shoes and a new Rolex.

[Baggsy]

It takes a year before they actually close the card. Had something show up on a card that I had cancelled 9 months later.

[rideitlikeyoustoleit]

+1 on the credit score. It'll hurt you. Just don't carry a balance and cut them up.

[2live&ride]

+1 on the credit score. It'll hurt you. Just don't carry a balance and cut them up.

Not sure how credible that statement is...
If you're applying for a loan and it shows that you have a 5000$ CC even if you owe ZERO on it, it still counts as money owing in the eyes of the bank/finance institution that you're trying to get a loan from.
Not sure how a cancelled CC could hurt your credit, maybe it's best to call the bank and ask?...

[LiNK666]

From what I read online it only hurts your credit score if it's your first credit card or if you carry a balance on it. I have done neither.

I have this stupid sears card I want to get rid of that has a $3500 limit. No use what so ever for me... will never use it... haven't in 1yr+.

[promac]

If you're applying for a loan and it shows that you have a 5000$ CC even if you owe ZERO on it, it still counts as money owing in the eyes of the bank/finance institution that you're trying to get a loan from.

Last time I applied for a loan, all the bank was interested in was assets, liabilities and income. I had to laugh, because I listed as deferred tax what I'd owe if I collapsed my RRSP and they told me they weren't interested in that type of liability, so they crossed it out. Turns out RRSP's are a better asset than I thought. They didn't ask about unused lines of credit either. Since the Sears credit card may have a good credit history associated with it, I'd keep that history going........just don't use it. It also show your creditors that they have to compete for your business. If your future lender ever has an issue with it, cancel it then. Don't open up a lot of credit cards - open a line of credit instead, where the rate and terms can be negotiated and tailored to suit you.

[strictlye]

As a former credit specialist for Equifax, DO NOT CANCEL OLD cards if you don't have to. Reduce the limit on them to free up some additional credit and lower your TDSR. I'm assuming you are trying to make a big purchase and this is why you want to do this.

Your credit score is partially based on the length of your credit file so when you cancel cards you had for a long time you make the average llength of your file shorter which makes you look like a bigger risk, hence your score drops.

Bankers usually tell clients to do this to free up room in their TDSR and then they no longer use so they can grant you more credit but you credit score will drop then you don't qualify anyway.

You file gets updated monthly from your financial institution so it will reflect on you bureau within 60 days.

[strictlye]

Last time I applied for a loan, all the bank was interested in was assets, liabilities and income. I had to laugh, because I listed as deferred tax what I'd owe if I collapsed my RRSP and they told me they weren't interested in that type of liability, so they crossed it out. Turns out RRSP's are a better asset than I thought. They didn't ask about unused lines of credit either. Since the Sears credit card may have a good credit history associated with it, I'd keep that history going........just don't use it. It also show your creditors that they have to compete for your business. If your future lender ever has an issue with it, cancel it then. Don't open up a lot of credit cards - open a line of credit instead, where the rate and terms can be negotiated and tailored to suit you.

Most banks do use it in the adjudication process, the banker may not be aware though. Basically if you rack up all you debt can yo make the minimum payments on the credit cards? In your TDSR calcualtion it will take a percentage when calculating your TDSR.

I can explain further if people need clarification.

To calculate the avg length of your credit file, the formula is below.

I put a post up explaining this a few years ago.

Credit Card 1 15 years
Credit Card 2 10 years
Credit Card 3 2 years

15+10+2 =27 / 3 = 9

If you cancelled the oldest card"

10+2= 12 / 3 = 4

Even if the card is cancelled it still appears on your bureau and the information is taken into consideration, however it no longer counts towards the length of your file. So you go from having an average of 9 years on your file to 4 years just by cancelling.

[mastahjay69]

Delete

[LiNK666]

As a former credit specialist for Equifax, DO NOT CANCEL OLD cards if you don't have to. Reduce the limit on them to free up some additional credit and lower your TDSR. I'm assuming you are trying to make a big purchase and this is why you want to do this.

Your credit score is partially based on the length of your credit file so when you cancel cards you had for a long time you make the average llength of your file shorter which makes you look like a bigger risk, hence your score drops.

Bankers usually tell clients to do this to free up room in their TDSR and then they no longer use so they can grant you more credit but you credit score will drop then you don't qualify anyway.

You file gets updated monthly from your financial institution so it will reflect on you bureau within 60 days.

Good explanation. This card is only 1 yr old. I was thinking of purchasing a house soon and I wanted my credit to be as good as possible.

Since this is only a yr old and I have cards that have lasted for a long time should I just cancel this or reduce the limit?

[REDD77]

I would just call and cancel it after your balance is zero. When you call, ask them to send you a confirmation letter of the cancellation date and just keep that incase something happens in the future.

[strictlye]

Good explanation. This card is only 1 yr old. I was thinking of purchasing a house soon and I wanted my credit to be as good as possible.

Since this is only a yr old and I have cards that have lasted for a long time should I just cancel this or reduce the limit?

Reduce the limit on cards you don't use to reduce your exposure to potential fraud. BTW, if you want your score to be as good as possible you would have to have a balance on those cards around the 30% of the limit. It shows you can manage credit without over extending yourself.

But if you want to purchase a house, your TDSR and GDSR limits are more important than your beacon score.

[LiNK666]

Reduce the limit on cards you don't use to reduce your exposure to potential fraud. BTW, if you want your score to be as good as possible you would have to have a balance on those cards around the 30% of the limit. It shows you can manage credit without over extending yourself.

But if you want to purchase a house, your TDSR and GDSR limits are more important than your beacon score.

I'll do that. Thanks!

[rideitlikeyoustoleit]

Reduce the limit on cards you don't use to reduce your exposure to potential fraud. BTW, if you want your score to be as good as possible you would have to have a balance on those cards around the 30% of the limit. It shows you can manage credit without over extending yourself.

But if you want to purchase a house, your TDSR and GDSR limits are more important than your beacon score.

More tips please! Haha

[crankcall]

But if you want to purchase a house, your TDSR and GDSR limits are more important than your beacon score.

help out those of us with no industry smarts, what is a TDSR/GDSR and a beacon score?

[Dresden]

As a former Visa employee for one of the Big 4 banks, I can attest to this statement. Best to let the account go inactive anyway. At the time of mortgage negotiation, the lending bank may make it a stipulation to close certain outstanding cards AT THAT TIME - and they send over a formal letter to the corresponding bank, you do nothing.

Files are purged monthly, and a report is sent to equifax.

As a former credit specialist for Equifax, DO NOT CANCEL OLD cards if you don't have to. Reduce the limit on them to free up some additional credit and lower your TDSR. I'm assuming you are trying to make a big purchase and this is why you want to do this.

Your credit score is partially based on the length of your credit file so when you cancel cards you had for a long time you make the average llength of your file shorter which makes you look like a bigger risk, hence your score drops.

Bankers usually tell clients to do this to free up room in their TDSR and then they no longer use so they can grant you more credit but you credit score will drop then you don't qualify anyway.

You file gets updated monthly from your financial institution so it will reflect on you bureau within 60 days.

[CrazyKell]

help out those of us with no industry smarts, what is a TDSR/GDSR and a beacon score?

TDSR = total debt service ratio

GDSR = gross debt service ratio

[LiNK666]

As a former Visa employee for one of the Big 4 banks, I can attest to this statement. Best to let the account go inactive anyway. At the time of mortgage negotiation, the lending bank may make it a stipulation to close certain outstanding cards AT THAT TIME - and they send over a formal letter to the corresponding bank, you do nothing.

Files are purged monthly, and a report is sent to equifax.

I think I'll reduce the credit limit to $500 (hopefully that doesn't have any negative impacts on my credit) and will let it go inactive. Considering I haven't touched it or will ever touch it's of no use -___-