Boot That
Card!
TO KEEP
YOUR Credit Score
HIGH
Dear Liz: One of my
credit card companies
says it will soon start
charging an annual fee.
I’d like to close this
card—I don’t use it—but
I worry that will hurt
my credit scores, and
we may be buying a car
soon. What should I do?
Use your cards,
but use
10 percent or
less of your
credit limit.
Pay on time.
A late payment
can knock off
100 points.
Check your
credit report
for errors,
including
accounts that
aren’t yours.
continue to use the credit
you have responsibly. So be
mindful of your scores, but
don’t let a bank leverage
your fears for its own profit. Closing an account can
be an enormously satisfying way of letting the bank
know you’re mad as heck
at its fees and you’re not
going to take it anymore.
If you have excellent
scores—750 or above on
the 300-to-850 FICO scale
that many lenders use—
and several other open
credit card accounts, you
have little to fear from
closing one account. Even
if it’s your oldest or high-
est-limit card—the kind of
account you would typi-
cally want to keep open—
your scores will bounce
back. If you’re still wor-
ried, just put off closing the
account until you get the
loan you want. ;
Liz Weston is author of Your
Credit Score: Your Money
and What’s at Stake. She
blogs at asklizweston.com.
So your wallet is thick with credit cards. Don’t worry. The leading credit-scoring system, from the Fair Isaac Corporation (FICO), doesn’t punish you for having lots of cards—so long as you don’t run up big balances. In fact, access to plenty of credit is good for your scores. Americans, on average, have 3. 5 cards, according to a Federal Reserve Bank of Boston study, and you can have many more while still maintaining stellar credit scores. The key is to use your cards lightly but regularly—and to pay them in full every month. …But Keep Those You Can It’s debt that’s bad, not plastic
GOT A MONEY
QUESTION?
Let us know what’s on your mind
at aarp.org/askliz.
