Should I let a credit card expire?

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RenoJay
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Location: Nevada

Should I let a credit card expire?

Post by RenoJay »

I received notice that a credit card which is buried deep in my drawer somewhere is going to be cancelled due to non-use unless I renew it soon. The card has a limit which is only about 6% of our total, available revolving credit, and we only utilize about 6-8% of our available revolving credit (and pay if off monthly.)

Do you think there will be a hit to my credit score if I let this card expire?
scone
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Re: Should I let a credit card expire?

Post by scone »

Maybe. Our credit score went down a little recently because we have no credit cards, and no revolving debt. There's a sad irony in there somewhere. :shock:
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Ice-9
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Re: Should I let a credit card expire?

Post by Ice-9 »

Apparently utilization factors in heavily to your score, and if this is a card you haven't been using at all, that's 6% off the denominator of the utilization percentage with the numerator of that fraction remaining the same.

Also, if this card is one of your older cards, it will also affect the average age of your lines of credit, which also factors into your score.

So, yes, I think letting it expire will lower your credit score. However, I would expect it to be just a slight decrease. If it were me, I'd just renew it as long as there aren't any fees associated with keeping it open.
ajcp
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Re: Should I let a credit card expire?

Post by ajcp »

Ice-9 wrote:Apparently utilization factors in heavily to your score, and if this is a card you haven't been using at all, that's 6% off the denominator of the utilization percentage with the numerator of that fraction remaining the same.
It would increase OP's utilization from 8% to 8.5%, basically a rounding error. Maybe it would drop like a point, but credit scores aren't that precise anyway.
Ice-9 wrote:Also, if this card is one of your older cards, it will also affect the average age of your lines of credit, which also factors into your score.
Not for 10 years, it won't


If you want to keep it open you can, but it won't hurt you if you close it.
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Ice-9
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Re: Should I let a credit card expire?

Post by Ice-9 »

Good points ajcp!
The Wizard
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Re: Should I let a credit card expire?

Post by The Wizard »

It probably depends on how many OTHER credit cards you have and the total credit limit.
If you somehow have ten credit cards, closing one will hardly matter.
But if only two credit cards, then could matter more in computing credit utilization, etc...
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tbradnc
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Re: Should I let a credit card expire?

Post by tbradnc »

I recently canceled a Chase card I've had since 2003 with a 25k credit limit and within a few weeks received an alert from Equifax informing me that my FICO score had dropped 12 points.

Still have about $150k in unsecured credit and never carry a balance so I wouldn't think closing the account would affect our utilization ratio.
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RenoJay
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Re: Should I let a credit card expire?

Post by RenoJay »

tbradnc wrote:I recently canceled a Chase card I've had since 2003 with a 25k credit limit and within a few weeks received an alert from Equifax informing me that my FICO score had dropped 12 points.

Still have about $150k in unsecured credit and never carry a balance so I wouldn't think closing the account would affect our utilization ratio.
TbradNC: That's a little scary. Did you score come back up? If so, how long did that take?

On a side note, it seems like opening a credit card is like buying a timeshare or joining the Mafia. Once you're in, you never get out!
tbradnc
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Re: Should I let a credit card expire?

Post by tbradnc »

RenoJay wrote:
tbradnc wrote:I recently canceled a Chase card I've had since 2003 with a 25k credit limit and within a few weeks received an alert from Equifax informing me that my FICO score had dropped 12 points.

Still have about $150k in unsecured credit and never carry a balance so I wouldn't think closing the account would affect our utilization ratio.
TbradNC: That's a little scary. Did you score come back up? If so, how long did that take?

On a side note, it seems like opening a credit card is like buying a timeshare or joining the Mafia. Once you're in, you never get out!
This just happened 2 weeks ago - I haven't received a score alert from Equifax so it's still down as far as I know. It dropped from 790 to 778 so it's not that big of a deal but still I was surprised.
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