Closing a new card won't undo credit score hit

Opening Credits columnist Eric Sandberg
Erica Sandberg is a prominent personal finance authority and author of "Expecting Money: The Essential Financial Plan for New and Growing Families." She writes "Opening Credits," a weekly reader Q&A column about issues for people who are new to credit, for

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Question Dear Opening Credits,
I opened two credit cards on the same day, but I only need one. Will it hurt my credit score to deactivate the card that I do not use? -- Ampy


Dear Ampy,
If you only want and need one credit card, and it has enough of a credit line to suit your lifestyle, I see little wrong with closing the unnecessary account. Yes, your credit score will dip, but you must determine what is most important to you -- easy bill management or getting the highest score possible.

If you're' hoping that deactivation will erase the card's record from your credit reports, it won't. Once you receive the card after applying for it, whether you activate it or not, it is considered an open account in the eyes of the issuer and the credit bureaus.

Is it easy credit management? It's pretty simple to manage a single credit card account. You'll never have to wonder which card you charged with, and you'll have one statement to monitor rather than two. Also, two credit lines can add to temptation. Plenty of people have a hard time staying out of debt simply because their credit lines are overabundant.

Or do you want the highest score in the shortest amount of time? To create excellent credit score, you'll need to follow a certain protocol: Pay your card bills on time, keep your balance well below the credit limit and charge only what you can pay in full by the due date.

When your card issuer sends years of these actions to the credit reporting agencies, your scores will rise. That's because credit bureaus take the data listed on a credit report and puts it into a mathematical model that predicts lending risk. If you've been responsible with money and credit for a long time, you're considered a low-risk borrower.

The damage is already done to your score, because it took minor hits when you applied for the two cards and the issuers checked your creditworthiness. These "hard pulls" on your credit will disappear over time. You also shortened the average length of your credit history by adding two new accounts. Still, these are both relatively minor factors, and you'll recover with a continuing record of on-time payments.

Since you have both cards, and you have already taken the hit, why not keep both, but use them strategically? You didn't address this in your question, but if you're already carrying a balance, doing a balance transfer to spread that balance across the two cards will help with your credit utilization, which is an important factor in credit scoring. If you're not carrying a balance, great! By keeping both cards open, you'll have a larger credit limit, so that if you have a circumstance in which you really need to borrow, you won't hurt your score again by gobbling up the available balance. By keeping the two accounts open and relying on your preferred card for the majority of your purchases, you can reduce confusion while increasing your credit rating. Here's how:

  1. Keep one card for a fixed, revolving expense. This could be a health club membership or even rent (many landlord and property management companies are accepting credit cards these days, although usually for a fee). Have that sum charged to this account, then automatically deducted from your checking account on a day when you know you'll have the cash to cover it. On a monthly basis, check your credit card statement to make sure the payment was posted. This should take no more than five minutes. Stick the card in a safe place in your home so you're not tempted to use it for anything else.  
  2. Use the other card for variable expenses. Airplane tickets, groceries, clothes, gifts and dining out are among these ever-changing expenditures. Your balance will vary with what you spend that month, so take pains to charge only what you can afford to repay and send the entire balance due. Sure, you can pay less, but this way you'll avoid costly interest fees and debt.

Follow this plan and your credit score will rise fast and furiously.

If you cancel the unwanted card, stick to the "charge, but pay in time and in full" system with the one you keep. Your score will dip a little in the beginning yet will steadily recover.

See related: How credit mix is calculated in FICO scores

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Updated: 11-17-2018