Dear Liz: I have a credit score of 761. I am retired and for some time I have been considering canceling some of my credit cards or asking the credit card issuer to reduce the high limits on them. I do not have a need for the high limits and didn’t request them — the card issuers just kept raising the limits. When I read about all of the identity theft problems, I get nervous thinking about how much credit a thief could access. Is it best to just use the cards regularly even if the amount charged is not much rather than cancel them? Or if I did request the limits to be reduced, how would this affect my credit score?
Answer: It’s refreshing to hear from someone who thinks his limits are too high, rather than the more common complaint these days that a lender suddenly slashed the limits without notice.
Here’s the deal: Those high limits are helping your credit scores, and you risk damage to your scores if you close accounts or ask for the limits to be lowered. Furthermore, as long as you monitor these accounts at least monthly, you needn’t worry about a thief hijacking them. You’re protected against fraud, and most issuers waive even the $50 they could charge in the event your cards are fraudulently used.
If you do decide to close any accounts, try to keep open your oldest and highest-limit cards. Also, make sure all your remaining cards aren’t issued by one lender. Lenders are responding to the credit crisis in different ways, with some reducing limits much faster and more broadly than others, so it makes sense to diversify your credit, much as you would your investments.