Don't Need Those Cards
Ken has two credit cards charging him annual fees of $79 and $39. Should he cancel these cards and not worry about his credit score?
QUESTION: Ken in New York City has two credit cards charging him annual fees of $79 and $39. Should he cancel these cards and not worry about his credit score?
ANSWER: I wouldn’t keep any credit cards open, and yes, that will negatively affect your credit score. When you quit borrowing money and don’t have any open accounts anywhere, your credit score will just disappear in about six months. Then you can qualify for a home easily. You don’t want to be in no-man’s land with a credit score. You either want to have a fabulous one, which means you borrow money all the time, or you don’t have a score because you don’t have any open accounts of any kind.
If you have that, then you qualify for a mortgage that way. You’ll have to do manual underwriting with the mortgage company, but that’s not bad. Cancel the cards. I don’t want any cards open. I’ve never met a millionaire who told me he made all his money with his Discover points. I don’t meet people who prosper because of credit card use. That’s the biggest mythology running around the whole culture right now. It’s almost humorously ridiculous if you think about it.