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Will paying off a closed credit card with a balance improve my credit score?
@simyengi wrote:Will paying off a closed credit card with a balance improve my credit score?
You should see some scoring bump
@simyengi wrote:
That's great. I currently have two closed accounts with a balance ($1641 and $881). As for open cards, I have two secured cards, one of which has a $250 limit and $0 balance, while the other has a $300 limit and $0 balance. I'm an authorized user on a credit card that has a $1200 limit and $28 balance, but it's only reporting to EX (701 FICO)and TU (632). EQ is also 632. I need to bump one of the latter scores to 660 so I can qualify for mortgage. TU is slow to update the AU account, which is totally frustrating. My mortgage guy told me to handle the open accounts first because they would impact DTI ratio, not the closed ones.
Seeing how your not carrying any balances paying the closed accounts can only help
The closed accounts with balances are hurting your utilization, which is a significant part of the FICO score. If the credit limit on the closed accounts is close to the balances, paying them off will improve this factor significantly and you will reach your target score.
This may seem like a dumb question, but which one should I pay off first?
Home Depot
EX (701) - has been deleted
TU (632) - has been deleted
EQ (632) - still reporting $881 balance
GE/Home Design - being managed by credit counselor
EX - still repoting $1641 balance
TU - not reporting
EQ - still reporting balance
Whichever one has the highest utilization (ie: it is the closest to the reported credit limit). If both of the closed cards have reduced your credit limit to $0, then pay off the highest balance first.
Here is my current utilization on the closed accounts:
- Credit card #1 is at 55%
- Credit card #2 is at 44%
@simyengi wrote:Here is my current utilization on the closed accounts:
- Credit card #1 is at 55%
- Credit card #2 is at 44%
Can you afford to pay both off?