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Past ffew days I have been posting how citibank cc gave me two options, close your account and keep lower interest rate, or keep open and pay a very high rate. I was concerned about closing a credit card, cause it may effect my high FICO score. I recently read this, does anyone know if this is correct?
If you close an account yourself, it does not have a negative notation on your credit.
However, if a creditor closes your account, it usually is a ding on your credit.
There are two notations:
1) Closed by grantor, or
2) Closed by consumer
Neither of these notations has any effect on your FICO score.
The notations have no effect on your FICO scores.
Other factors such a usage and account age will have an effect on your FICO score.
@dee wrote:
Oh, well I have always heard not to close your accounts, especially the older ones as it will effect your fico score...
That is true - closing accounts can have a negative impact because it can increase your UTIL, as your available credit is lessened, ESPECIALLY if your CLs were high. It's not so bad if you don't carry balances. Also, those cards will now only stay on for ten years, and if you've always paid them on time, you'd want them on your CB for an indefinite period, and to keep your AAoA high.
@dee wrote:
Yes, I agree. I will check my fico score in six months and see how it effect my score. I mean I closed it, not them, but some say it won't effect my score either way, so I guess no one really knows what will happen.
As mentioned, it will NOT have any effect on your FICO. Whether closed by you or the grantor that is.
Now, it will have an effect on your FICO because of the possible change in the UTL. If UTL is zero, again no change. Age will not be effected.
@dee wrote:
well to me that's the same, it will effect my score, no matter what...whoever closed it..period..
That's the point. It does not matter who closed the account. The change will be exactly the same one way or the other.