Does it hurt ones credit rating if you close an account even if you still have a balance?If it does why should this be? Thanks
BECAUSE F.I.C.O. THINKS IT SHOULD BE THAT WAY!!! My wife has a card that is closed because they were going to "JACK" it 4% so we closed it!!! If it was open it would cost 4%...THAT'S STUPID FOR JUST A FEW EXTRA POINTS!!!
yes, it hurts your score. why? when you close an account the credit limit/high credit is no longer factored into your ratios. Meaning: if you owed 2000/5000 you were at 40% ratio with that card. those numbers are factored into your ratios and those ratios account for 30% or so of your score. When you close, the 5000 is taken out of the equation completely. so you're left with 2000 out of the rest of your revolving credit limits... bad idea. Revolving ratios are a key predictor in the score... so those especially can hurt you. The other reason it may be a bad idea would be buried in your cardholder agreement. Many cards access a fee per month or jack the interest rate when a card is closed with a balance. Pay it in full, then cancel.
NEXT CARD HAD A CLOSED CARD INTEREST RATE OF 19.99%... FLEET HAS ONE TOO...(BY CLOSING THE ACCOUNT, YOU DEFAULTED)!!! Default/closure: up to the higher of 21.99% APR (.06025% daily periodic rate) or LIBOR + 20.080%
