I have had two cards sitting at a zero balance for two years now and my goal is to have more cards at a zero balance soon. I have heard that credit card companies don’t like you not using their card so they will give you a worse credit rating if you keep it at zero. Is this true? When and should I cancel a perfectly good credit card with a high line of credit?
Sgt Big Red
Favorite Answer
As long as the account is being reported at paid as agreed and you have no late fees or other charges, then keeping a $0 balance does not hurt your score.
You will not get many points for the account history as you have not used it and it does not provide a pattern of your credit use and payment history.
You should use it every now and then and simply pay it off when the statement arrives. You need to keep the account open as it provides you with a line of credit and that is used to determine your debt utilization ratio. This is how much you owe compared to how much credit you have available.
The lower the ratio the better your score.
If you close the accounts, you will loose that available credit line and this will lower your debt utilization ratio.
I have provided a link for you to learn how credit works and what affects your scores from FICO
Hope this helps answer your question.
Anonymous
You need a quick and easy guide to how the fico score works go here
http://hubpages.com/hub/experianficoscore
You'll see a section about what parameters credit reports are based.
Good luck
?
Some places will close your account if you don't use the card for an extended period of time.