I have a Capital One Card with a $450.00 credit limit which I've had for a year now (I can't stand them) and Cross Country Bank Card with a $500.00 limit which I've had for almost six months. Cross Country Bank charges terrible fees. And a Household Bank Card which I've had for almost a year with a $400.00 credit limit. I like Household Bank. My question is. If I pay off the Capital One and Cross Country Bank Card and close them out and keep the Household Card, will this affect my score any. Will my score go up? I just don't feel these two cards can offer me anything substantial anymore?
My understanding is that part of FICO looks at available credit vs. used credit percentage. So, if you have 1 card with a 500 dollar limit and you've used 250, you have 50% utilization. I've heard that a "magic %" is around 25-30% utilization, so it would be best not to keep all your financial eggs in one basket. Pay off the other 2 cards by all means but keep them open to help with the credit utilization %. Kate
Yes, but I don't want these cards anymore. I thought paying off credit cards and then closing them would help your score. Is that true?
I just read an article today. The only way closing an account would hurt is if the account was closed by the creditor. As long as the acccounts are paid in full and then you close them, you should be fine. But you have to make sure your credit report says "Closed by grantor" as this is more positive.
Re: Re: Question regarding closing accounts could you pass on the link to this article if online? "......it usually hurts your credit score if you close card accounts or reduce limits significantly because scoring models look at how much credit you're using in relation to your limits - even if you pay in full each month...." From: http://www.cleveland.com/business/tmurray/index.ssf?/base/business/1080561353231580.xml I found this in a post from yesterday: http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=413332#post413332
Re: Re: Question regarding closing accounts That's exactly what I'm referring to. Closed by consumer is a good notation, and closed by credit grantor is bad. BUT - creditors and FICO look at the credit utilization % - total $ amount of credit limits vs. total $ amount used. If you pay the 2 other cards off and keep them open, their credit limits count toward the total $ amount of credit limits, and help keep the utilization percentage down, which is a good thing.
Re: Re: Question regarding closing accounts Here the article. I meant closed by consumer is a good notation that right. Here's the link: http://aol1.bankrate.com/aol/news/debt/debt_manage_2004/credit-card-cancel.asp
Re: Re: Question regarding closing accounts thank you for posting the link although I disagree with some of what "Jean Brannan, community outreach coordinator for Consumer Credit Counseling Service" wrote,particularly "One of the reasons people would want to close out credit cards is if they want to purchase a home," Brannan says. "To have a lot of available credit is not to your advantage." This goes against alot of what I've read although the same is stated here... "....unused credit card accounts can drag down your credit score,......" from: http://the.honoluluadvertiser.com/article/2003/Feb/13/bz/bz24a.html
Re: Re: Question regarding closing accounts The problem with what bank rate said about this is their statement is incomplete. In this article Like many of their statements they leave out or over look important details concerning the subject thus causing the readers to draw incorrect conclusions. This info from them is no exception. ><- <>- ><- <> ~~~ ><- <>- ><- <> ><- <>- ><- <> ~~~ ><- <>- ><- <>
Re: Re: Question regarding closing IF the accounts you don't like are (a) younger than the average age of your accounts and (b) have CLs less than your average CL, it might make sense to close them. You need to be very careful about what your "average" is - it could be substantially different on each CR. It's best not to make emotional decisions about financial and credit choices. "I don't like them" is an example. I don't like the IRS very much, they've made my life a living hell in the past but I continue to pay them and will as long as I have assets I worry about. Fees also play into the decision, but for example, if you only have three revolving accounts and Cap1 is one of them, maybe keep them around until you've replaced them with a prime card. And if you go ahead and close an account, do so in writing, CMRR and request an acknowledgement in writing. This gives you something to come back if you don't like what happens later.
Re: Re: Question regarding closing accounts This is not strictly true. If closing the mentioned accounts affects your overall ratios, it could easily hurt your scores.... See this: If you have two credit cards, each with a $50 limit. Your total credit available is $100. Now, you have one card that has a balance of $40, and one that has a balance of $20. Your total credit used is $60 our of $100 or 60%. Now, you think, I don't really need that smaller balance, I think I'll just pay off the $20 balance and close the card. Great that you paid it down. You brought your ratio from 60% down to 40% utilization. BUT, when you closed the account, now your total available credit drops to $50, of which $40 is used. Your utilization is now at 80%! this will cause a BIG hit to credit scores, particularly if you are in the middle ranges (620-700). aiki
Re: Re: Question regarding closing accounts Originally posted by WhiteZone I just read an article today. The only way closing an account would hurt is if the account was closed by the creditor. As long as the acccounts are paid in full and then you close them, you should be fine. But you have to make sure your credit report says "Closed by grantor" as this is more positive. If you believe that you are more of a FOOL than I thought...
Re: Re: Question regarding closing accounts If you have a short history, it will hurt to close them, especially if you're closing your oldest account. Keep the oldest one, even if you have to pay some fees, until you get more established. You don't have to use it much, a tank of gas every couple of months and pay it off is good.
Re: Re: Question regarding closing accounts This is not strictly true. If closing the mentioned accounts affects your overall ratios, it could easily hurt your scores.... See this: If you have two credit cards, each with a $50 limit. Your total credit available is $100. Now, you have one card that has a balance of $40, and one that has a balance of $20. Your total credit used is $60 our of $100 or 60%. Now, you think, I don't really need that smaller balance, I think I'll just pay off the $20 balance and close the card. Great that you paid it down. You brought your ratio from 60% down to 40% utilization. BUT, when you closed the account, now your total available credit drops to $50, of which $40 is used. Your utilization is now at 80%! this will cause a BIG hit to credit scores, particularly if you are in the middle ranges (620-700). aiki
Re: Re: Question regarding closing accounts "Closed by grantor" IS NEVER LOOK AT IN A POSITIVE WAY!!! SCORE WISE it has no affect...BUT looking at it with their EYES...a credit card/loan company will ASSUME YOU WERE BAD!!!
Re: Re: Question regarding closing accounts I'm sorry I meant "Closed by consumer." That's a more positive listing. And excuse me, I am not a fool.
