As part of my credit rebuilding process, in April of this year I obtained 4 sub-prime secured cards. Since that time, I have moved from sub-prime to prime, and I now hold 3 Citibank cards (total of $24K in limits), an AMEX Gold Card, and various retail and gas cards. I also just got a $15K, 6.05% used car auto loan from my credit union. My question is this. Since I don't really need the sub-prime secured cards anymore, should I go ahead and close these accounts now, or wait until the cards have aged for 12-18 months? It would be nice to be able to get my security deposits back, as they total around $2,500. It would also be nice to slim down my wallet a bit, which is now about an inch and a half thick with credit cards. Any thoughts? Do I leave the accounts open for a little while longer, or go ahead and close them now? And if I close them now, what do you think the effect will be on my FICO score? Any advice would be greatly appreciated! -chriscraft
Ask yourself this. Are you happy with your current credit,car loan,etc? Your scores will not drop that much when closing out the old accounts.
You could always just leave the sub-prime cards at home, only using them once a month just to keep them active. If you don't need the card there's really no point to carry it around!
It's not that his scores will drop a lot when he closes the account, it's that he will not get the benefit of the score boost from the account reaching an anniversary.
I think one of the factors in determining the score is the average age of open accounts. This seems stupid because it doesn't have anything to do with risk but I digress. I'm in the same boat you are. I would love to close my two remaining subprime accounts but they are seven and three years old while the prime accounts are between one and two. But since you opened your subprimes only recently, you might want to just close them out. I don't think the impact on your score will be that signifcant because these accounts have not aged enough to help you anyway. Come to think of it, getting rid of small limit accounts might be an good thing. Reducing the number of open lines of credit may boost your score and attract lenders with higher limit offers and better terms. This is what my tea leaves tell me and they are just as good as the random number generator used by the CRAs to produce your score.
Why do you think that older positive accounts don't have anything to do with risk? It's easy to get a new account and keep it current for a few months or a year or so. Most of us who screwed up our credit have done that. I think payment history over the long haul has everything to do with what kind of credit risk you are. Even though I'm working hard at erasing mine.
Well, if you close them, I will be interested in knowing how it affects you score, because I have some I want to close, but am waiting because I don't want to lose out on the anniversary jumps in my scores. So you can experiment, and I will watch and hold the light, K?
DaveLV and Mosdef-- It's not that I think length of credit history has no bearing on risk. It's the idea that the length of my history of OPEN accounts bears on risk.
Chriscraft, Seriously...if I were you..LOL. I do exactly what LK just executed. Besides, you don't need those- Subprimers craps- baby limits to stay on your CRs anymore...right? As long as you're not carrying a significative balance of indebtedness, go ahead and close them all. I closed 6 accts in one single day, only a few point drop. Think about it! Herman
