Closing Cards Question

[Anonymous]

Hey everyone, I haven't posted in quite a long time because I haven't really been as active in tracking my FICO/credit. I just got a personal loan from a local bank to consolidate my credit cards. Originally, I was told I would not need to close out the cards however when I went to sign the documents, the woman told me that one of the stipulations to getting the loan was that we close out the cards they are paying off. I am still dealing with the anxiety of closing these cards that I worked so hard to get, but that is kind of a moot point. My question is, some of the cards have a higher balance than what the bank is cutting a check for but along with those checks, I had to sign a request to close form to send in to the creditors. What is going to happen with those cards? I don't mind paying the difference from my savings but will that negatively affect my credit? Will closing out these cards negatively impact me as well? Any help would be appreciated. Thank you!

[AverageJoesCredit]

Was this a debt consolidation loan. Id imagine for that maybe the need to close the cards so you dont rerack up the debt but i would be wary of a loan that wants me to close my cards. Good thing is even closed youll still have the history up to 10 years or more

[Anonymous]

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@Anonymous wrote:
Hey everyone, I haven't posted in quite a long time because I haven't really been as active in tracking my FICO/credit. I just got a personal loan from a local bank to consolidate my credit cards. Originally, I was told I would not need to close out the cards however when I went to sign the documents, the woman told me that one of the stipulations to getting the loan was that we close out the cards they are paying off. I am still dealing with the anxiety of closing these cards that I worked so hard to get, but that is kind of a moot point. My question is, some of the cards have a higher balance than what the bank is cutting a check for but along with those checks, I had to sign a request to close form to send in to the creditors. What is going to happen with those cards? I don't mind paying the difference from my savings but will that negatively affect my credit? Will closing out these cards negatively impact me as well? Any help would be appreciated. Thank you!

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For FICO scoring purposes you need to have 1 card reporting a balance of 10% and the others at a zero balance.  If all you of your cards will be closed, then the only thing reporting will be an installment loan, so potentially, this could affect your FICO scores.  Are the balances such that you have to do this or can you establish a plan to pay off your cards and SD them until utilization becomes manageable again?

[Anonymous]

I guess I can understand why they would ask you to do that, but it still sucks to have to cancel something you worked at.  On the bright side it will still report for (I believe) 10 years).  Closing a card will affect your overall available balance for util purposes, but any score drop from that can rebound.

I, too, just got a personal loan to consolidate debt, but I did it through my local credit union.  Thank goodness they didn't ask me to close anything down...I would have had a slight panic attack.  But I had already resigned myself to sock-drawering the cards that I paid off so that no new debt would accrue.

(Speaking of...I guess I need to change my gardening icon back to a seedling....almost made two years!!!!)

When looking at other options though, one company tried to get me to do a debt forgiveness plan where I would have settled my debt for a portion of what I owe.  I told the representative that there was NO WAY ON EARTH I was going to ruin the relationships I have worked hard at establishing with putting debt settled in their records.  The guy told me I was being foolish and would never be able to clear the debt on my own....to which I laughed and told him if he ever thought he was going to scold me into his commission he was nucking futs.  My personal payoff plan is working exactly as I built it too in one of my many spreadsheets...LOL.