Should I close old store credit cards that I don’t use?

Jennifer asks: I just read your article about closing credit cards. My question is, I have store credit cards that I never use anymore and when I did I would only put a couple hundred on and pay as soon as they came in. I don’t have a balance on any of these cards. I am asking because I am looking to buy my first home and before I look into a loan, I would like to make sure all my finances are in order. What should I do?

Are any of the store credit cards your oldest credit account? In other words, was one of these cards the very first credit card or loan you took out? If so, I would keep that card open until after you get a mortgage, but go ahead and cancel all the others now.

If not, I don’t see the harm in canceling all four of these accounts. Store cards don’t have really high credit limits, so closing them is unlikely to have a huge impact on your credit utilization. Plus, the fewer open accounts you have when you apply for a home loan, the better. Your credit score may dip slightly immediately after closing the accounts (for a couple of months), but not by much, and it should recover.

Even so, I would think lenders would rather see you have a slightly lower credit score than a higher score but a bunch of open and unused credit cards.

Good Luck,

David @MoneyUnder30