Close Line of Credit?

[CreditScoreBlueprint]

I'm considering closing my PayPal Smart Connect account since I don't have a need for it and it's currently my lowest credit limit account (also the highest APR). I understand this will temporary lower my score (increasing my debt to limit ratio), but that doesn't bother me.

What does make me think twice is the fact that Experian is reporting it as a line of credit, rather than a credit card. And since this is my only line of credit account, I'm wondering if this will permanently lower my score (assuming I don't open another line of credit). The way I understand it, a variety of credit increases your score. And that variety includes 4 categories: real estate loans, installment loans, credit cards, and line of credit.

So would getting rid of my only line of credit account limit my score in the long run? I'm currently sitting on a 740 FICO score and my goal is 800, so everything counts at this point. 

[RyVision]

All I can say is a mix of credit seems to boost scores. The low limit will eventually go up on your PayPal account though if you're wondering.

If you want to "hear" something funny about types of credit vs cards etc.  My AMEX reported once (that I noticed) on one of my reports as ....... "Real Estate"......  

My PayPal SC seems to report as a revolving CC on all of my reports from what can see.

[Creditaddict]

I doubt you will probably see any score decrease with this account however have you used it at all in last 4 months? did you ask for a cli?

This use to be a like a B plan on Best Buy Store Card, nevere reallly increased and rate never went down... but in the last 3 or so months I have seen some HUGE CLI all of a sudden... I mean up and over $2-4 thousand.

[CreditScoreBlueprint]

Yeah I actually use it a few times a week because I work from home managing websites, and I pay all my writers, designers and coders through Paypal. I'll usually just use the Smart Connect account, but I have the option to use my credit cards too.

In the 2 years that I've had the account, my rate has never decreased, my credit limit went up from $1,500 to $3,100, and my credit score during this time went from around 620 to 740. But to be fair, I've never called to ask for an increase on the limit or a decrease in the rate.

Now most of my credit limits are over $10,000, so it seems pointless to keep the Smart Connect account open since I no longer need the credit. I'm a minimalist, so having more cards than I need bugs me, even if I physically get rid of the card. Knowing that it's open still gets to me, lol.

But if the fact that it's a line of credit helps my score, then I wouldn't mind keeping it open.

[pizzadude]

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@JABacchetta wrote:

Yeah I actually use it a few times a week because I work from home managing websites, and I pay all my writers, designers and coders through Paypal. I'll usually just use the Smart Connect account, but I have the option to use my credit cards too.

In the 2 years that I've had the account, my rate has never decreased, my credit limit went up from $1,500 to $3,100, and my credit score during this time went from around 620 to 740. But to be fair, I've never called to ask for an increase on the limit or a decrease in the rate.

Now most of my credit limits are over $10,000, so it seems pointless to keep the Smart Connect account open since I no longer need the credit. I'm a minimalist, so having more cards than I need bugs me, even if I physically get rid of the card. Knowing that it's open still gets to me, lol.

But if the fact that it's a line of credit helps my score, then I wouldn't mind keeping it open.

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That's interesting that it reports as a line of credit - I've checked on all my reports and it shows as a loan type of "Credit Card" on all three reports.  Does it show a "Type" of "Installment" or "Revolving" on EX ?

[CreditScoreBlueprint]

@Pizzadude - As soon as you login to Experian, scroll down and click on the "Account Types" tab. Experian shows the 4 different credit types as being real estate loans, installment loans, credit cards and retail cards. My Paypal Smart Connect account is being reported as a retail card... the only retail card I have.

But I also found out that GE Capital manages the Paypal Smart Connect accounts and GE Capital is considered a consumer finance company. CFC's are actually considered a negative on the report from my understanding... as they typically charge much higher APRs and are therefore considered to be of higher risk. Turns out my APR with them is 27%, which is outrageous considering the 7.99% and 10.99% on my other cards.

I'm in the process of cancelling the account now.

[LS2982]

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@JABacchetta wrote:

Yeah I actually use it a few times a week because I work from home managing websites, and I pay all my writers, designers and coders through Paypal. I'll usually just use the Smart Connect account, but I have the option to use my credit cards too.

In the 2 years that I've had the account, my rate has never decreased, my credit limit went up from $1,500 to $3,100, and my credit score during this time went from around 620 to 740. But to be fair, I've never called to ask for an increase on the limit or a decrease in the rate.

Now most of my credit limits are over $10,000, so it seems pointless to keep the Smart Connect account open since I no longer need the credit. I'm a minimalist, so having more cards than I need bugs me, even if I physically get rid of the card. Knowing that it's open still gets to me, lol.

But if the fact that it's a line of credit helps my score, then I wouldn't mind keeping it open.

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You need to call in and ask for a CLI!!