I am working on trying to help my parents clean up their reports, tonight I ran my mom's, the only things is a few lates. They also last year closed a whole bunch of credit cards, from 94,95 and 96! They have a intrest-only loan on a rental home that they tried to change over and got denied. My question is besides getting rid of the lates, wouldn't it raise their score by seeing if they could open up some of those old cards again? Their score went from 760's to high 600's in the past year?
It was a big mistake to close those old accounts. That damaged their FICO scores by both increasing their debt to available credit ratio, and decreasing their average account age. They started looking like they were practically starting out, instead of having managed credit for over a decade. If they can actually reopen them, they should. If they just open new accounts that don't report the original account open date, they will still begin to benefit from the improvement in debt to credit ratio, but not from any improvement in average account age. It may take several years to get back up to the FICO levels they had been at. They might do better if they have a local bank, or credit union, with which they have had a longstanding relationship. Since credit is based on trust, and trust is based on experience, if they are likely to be involved in ongoing investment borrowing such as with rental property, they need to think in terms of building several long term banking relationships, just like you would for a business.
Thanks, for the reply that is what I thought, just wanted to make sure. They are going to try to reopen them.
