I have a credit card that is way over limit. I can't pay it off right now in a lump sum. Would it hurt my scores a lot if I close the account so I stop getting the over-the-limit fee charged to me? I have medical collections that I need to pay off to secure a mortgage and the mortgage person said nothing about the credit card. Since I am concentrating my money on the med. collections and getting the mortgage, I thought it might help to close the account. What's your opinion?
Gemini, Are you able to pay off some of your balance, or enough of it to bring it under the CL? A consistent payment pattern, however small, is better than paying lump sums irregularly. Spread the money around according to your ability to pay and the amounts you can negotiate. The credit card debt and any other reported long-term debt (with a repayment schedule longer than 10 months) will matter for your mortgage rates, if not the approval. Closing the account may improve your score by a few points, but the major benefit will come from reducing the outstanding balance. OTL fees will continue to accrue whether or not you close the account, I think. Sometimes doing the right thing financially may not benefit your score right away. The lender will likely wonder how you can afford a mortgage debt, but not CC debt. Good luck!
Closing the account does not stop the over the limit fees. I have a citibank account that is closed and still has a balance of 4300 dollars(limit originally was 4000) I had it up to as much as 5500 dollars with late fees and over the limit fees but believe it or not they have always reported me paid as agreed and not one 30 day late ever Citibank has been nice to me in that way. Anyway, I pay them about 150 dollars a month, min pay is about 90 but technically I am suppose to pay 90 plus the entire over the credit line. But again, citibank has been very nice to me Anyway, I still get charged monthly for the over the limit fee until I get below the limit which I will be this next month since 300 bucks is nothing now. Anyway, another bonus, just because I have been consisitant in payments and paying more than the required due, over the past 7 months they have lowered my interest % from 23.4 at its highest to 16.99 now without even asking Anyone who has a citibank card, keep it and stay good with them because they are great
