Citi cards is offering to reduce my interest rate and debt. It would be an account closed by creditor with arrangements. they offer a 12mo program where i pay a lower monthly payment and they reduce rate and fees. How will this affect my overall credit and fico score?
Shutting down the account will negatively affect two major components of your credit score - your credit history and credit utilization, which weighs the amount of credit you have against the amount you are using. Accounts closed by creditors with a remaining balance just don't look very good on your credit report either. It's tough to say exactly how much your credit score will be damaged, but it will definitely go down. If the balance is large enough that the reduction in the interest rate and fees will save you quite a bit of money, than it might be worth taking the hit to your credit score in the short run. Especially if you're not planning on making any large purchases in the near future that will rely on your having the best credit score possible.
