A lot of stores offer zero percent financing for purchases if people open a card. Is having a lot of those cards bad for credit scores?
These are typically not cards with super-high limits, so if you want to close them, it's not going to be a crisis. [If they had high limits and you closed a bunch of them, you could ding your credit score, because you'd be sharply lowering your total available credit limit. Then, if your spending stayed the same or rose, it would look like you were suddenly using a lot more of your credit. Using about 30 percent or more of your limit can hurt your score, by one rule of thumb.]
I think we’ve made people too scared of closing out cards. Every card is something you have to monitor, watch out for fraud, make sure you’re not paying an annual fee. Just in terms of the bandwidth overload of having too many cards, once you’re done with these cards I don’t think there’s a big downside to closing them—as long as you have access to other credit, and you're not closing it right before you’re trying to get another credit line.My concern would be less about having lots of these cards hurting your score and more about a card being taken over and misused. Even if you’re not liable, and it doesn't affect your credit record, it’s a pain.
Any advice about credit for recent college graduates?
Have a credit card and use it, but pay it off in full every month and don’t use more than 30 percent of the credit card limit. And remember that you don’t have to pay interest on your credit card to have a good credit score.
This article was provided by Bloomberg News.