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I was recently approved for $18,000 debt consolidation loan through my local credit union. The only thing is they want to close all the accounts once they pay them off so we're taling 7 or 8 accounts. The highest card limit is $9000 which they would pay off and close and some of the other accounts I've had for at least 5 years. I'm not sure if it's a good idea to close those accounts, wouldn't closing that many accounts have a significant negative impact on my credit score? I understand the banks point of view in that if they pay the bills off and leave them open I could potentially go out and charge those accounts back up, but I'm not sure if it's worth doing a consolidation if I have to close all those accounts and have a negative hit to my credit. Any advice?
I would probably look at it from the point of view of how much money I was saving vs any score loss... but my bet is even if they close them, having just 1 balance vs 8 balances you will see a score jump.
You could always go back later and either try to re-open or open new accounts as you pay down the new loan.
It is probably saving you a lot of money, which is important. Closing the accounts should not be a problem as long as you will have a few major cards left open. Having no open accounts would be a problem.
Would the consumer request to close the accout or would the bank(providing the loan) request the bank(credit card provider) to close it?
@Anonymous wrote:I was recently approved for $18,000 debt consolidation loan through my local credit union. The only thing is they want to close all the accounts once they pay them off so we're taling 7 or 8 accounts. The highest card limit is $9000 which they would pay off and close and some of the other accounts I've had for at least 5 years. I'm not sure if it's a good idea to close those accounts, wouldn't closing that many accounts have a significant negative impact on my credit score? I understand the banks point of view in that if they pay the bills off and leave them open I could potentially go out and charge those accounts back up, but I'm not sure if it's worth doing a consolidation if I have to close all those accounts and have a negative hit to my credit. Any advice?
Will you have any open cards left?
I can understand their thinking, but you need to keep at least one card open, ideally your oldest.
A member here just got a 60-70 point score jump for opening his first card, so that will give you an idea how important it is to have some revolving credit somewhere.
Thanks everyone for all of your advice. It seems the consensus is to take the debt consolidation, I think that's the route I will take. I will have a couple of accounts still open, but they aren't my oldest accounts. Thank you again.