tom b-
it’s all a balancing act, I’d say… Cancelling your oldest card is not a good move for sure, since this shortens your “length of credit history”. I found this article about it: http://www.bankrate.com/brm/news/Financial_Literacy/June07_credit_scores_ABC_a2.asp?s=3&caret=36b

Cancelling a more recent card is also not good for your credit score, because this will lower your dept to credit ratio (more credit and less dept is best). By cancelling a card, you have less credit at your disposal.

Contrary to what credit card companies sometimes want you to believe, you are almost never responsible for unauthorized charges. I haven’t read any small-print about this recently, but as long as you report unauthorized use within a given time-frame, report a stolen card immediately, and take reasonable mesures to protect your cards and pins from being stolen, the credit card company is liable.

Unfortunately, I don’t know about the 6 month period you mention.

Last but not least, you mention accumulating 12 credit cards. This relates to “Types of credit in use” on the above website. 12 cards, 2 car payments and a mortgage payment are certainly a better mix than 12 cards only. Unfortunately again, I don’t know what is too many cards, but 12 cards means that one has to apply for a new card quite often, and every application is mentioned on your credit report and too many applications over a longer period lower your score… So it really is a balancing act in my opinion.

Don’t hesitate to reply with your thoughts.

Rick-
Can you give us some more information? Amount of available credit before and after you closed some of your accounts? Number of accounts before and after?

One part of the credit score is the credit-to-dept ratio. It’s usually expressed in a percentage: 10% e.g. would be if you had $1000 of available credit and a balance of $100. The lower this percentage, the better. But I don’t know the following example would affect your credit score: 5 cards/accounts, $20,000 limit on each one (=$100,000 credit line), $100 total balance spread across the 5 cards. Your credit to dept ratio would then be 0.1%. In theory, this is good, but is this useless when it comes to your credit score because you might then not have a healthy credit mix? (e.g. no mortgage, no car payments)

One part of the credit score is the credit-to-dept ratio. It’s usually expressed in a percentage: 10% e.g. would be if you had $1000 of available credit and a balance of $100. The lower this percentage, the better. But I don’t know the following example would affect your credit score: 5 cards/accounts, $20,000 limit on each one (=$100,000 credit line), $100 total balance spread across the 5 cards. Your credit to dept ratio would then be 0.1%. In theory, this is good, but is this useless when it comes to your credit score because you might then not have a healthy credit mix? (e.g. no mortgage, no car payments)

Cancelling a more recent card is also not good for your credit score, because this will lower your dept to credit ratio (more credit and less dept is best). By cancelling a card, you have less credit at your disposal.

Contrary to what credit card companies sometimes want you to believe, you are almost never responsible for unauthorized charges. I haven’t read any small-print about this recently, but as long as you report unauthorized use within a given time-frame, report a stolen card immediately, and take reasonable mesures to protect your cards and pins from being stolen, the credit card company is liable.

Unfortunately, I don’t know about the 6 month period you mention.

Last but not least, you mention accumulating 12 credit cards. This relates to “Types of credit in use” on the above website. 12 cards, 2 car payments and a mortgage payment are certainly a better mix than 12 cards only. Unfortunately again, I don’t know what is too many cards, but 12 cards means that one has to apply for a new card quite often, and every application is mentioned on your credit report and too many applications over a longer period lower your score… So it really is a balancing act in my opinion.

Don’t hesitate to reply with your thoughts.

Number, type, and recency of inquiries (Experian)

Too few credit card accounts on which, in our estimation, you have paid a majority of the balance in recent months. (Experian)

Number of closed accounts (Experian)