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kteacher06

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Is it best to keep store credit cards open or closed if you pay them off each month they are used?
I just opened two store credit cards not knowing that they do a hard look to open them. My credit score is good. I plan to pay off the cards each time I use them. Is it best to close them? Or keep them open?

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Usually...keep them.

If they have already been officially opened and are in your credit history from now on, I would keep them. By now you should also see some credit inquiries in your credit history too? 

This is about debt-to-credit ratio. Both cards' limits add up to a certain amount. This amount becomes an "extra cushion" to your debt-to-credit ratio, provided that you do continue to use them and pay them all off. Let's say you used to have a total limit of $10k before these two cards, and you spend a total of $1k. Your debt-to-credit ratio is 10%. With these two new cards, your total limit now is $10k + (let's say $2k) = $12k. So if you still spend only $1k like usual, then your debt-to-credit ratio is reduced from 10% to about 8.3%. In the world of credit scores and history, that is good and should improve your credit score in the near future.

But if you use way more than before and keep a balance, everything I said earlier is negated. hahahahah...Your score would fluctuate and you might even see lower scores due to higher debt-to-credit ratio. My rule of thumb is to use less than 25% of my combined limits and still pay all in full at the end of the month. I'm still faithful with my 1 card since college and I'm at $38,000 limit just on that card. It started out with only $1300 but increased to that higher limit now. I still use about $500 each month and pay it off completely. It's been almost 10 years since I opened it. I don't plan to open up any more accounts. I'll just ask the company to raise it every two years.

Don't close any accounts, each extra amount is beneficial to your debt-to-credit ratio and thus would help increase your credit score. But only beneficial if you don't spend any higher than what you usually have or go over 25% taken into account of your new total limit.

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If you plan to use them and pay them off, closing them is not an option.   The question is, how does it affect your average age of accounts.   If they had ever been used, they will remain on your account with the open date and you cannot adjust that, even if you close them.  If they have never been used, you can contact them, decline their account and request that it be removed as it was not a mutual agreement.  The answer is, if they have ever been used, the damage is done and just like time take care of any negatives to your account.   The more accounts you have in good standing will be a positive on your account.   It could also be a positive on your Utilization as it is credit available that is not used.   It is possible, that unless they are giving you specific benefits (% discount on purchase) that is higher than on a rewards card that you could have been better suited to just use a card you already had.

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