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Member
eaunspa
Posts: 18
Registered: ‎05-17-2008
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Confused and Frustrated...

I am so confused.  I want to close accounts because it says I have too many accounts (31)!  First of all I have 5 Student Loan accounts and I'm upset that student loans are not viewed differently since you have to get one very semester, which brings up your number of accounts.

 

2) I have the following Department store cards, LB opened in 9/02, AV 5/00, BB 5/08, IK 06/07 and 1 major credit card 4/06.

 

3) I'm getting dinged because I have 11 accounts with balances.  5 are the student loans, 1 mortgage, 1 car loan, 4 credit cards.  I'm paying off 3 cards (2 department and 1 major CC) this month.

 

4) The raito to revolving balances to my credit limit is 75%.  I don't really understand this but I'm hoping paying off 3 CCs will help this.

 

5) After paying off the 3 CCs, I will have car loan of 11K and CC of 10K (and the 5 student loans which I'm paying off last because they have lowest interest rate).

 

Questions: How long should I wait to see an improvement in my credit score after paying off 3 CCs?

                 Why won't closing 5 department cards help my creidt score? (I would only have 1 CC, 1 auto loan and 5 student loans then).

                 I want to be able to buy a rental property in spring 2010, and I would like to have scores above 760s by then.  Please advise. 

5/15/08 TU=678 EQ=698 EX=662
3/9/09 TU=688 EQ: 701 EX=711
6/4/09 TU=729, EQ=740,EX=725
Moderator Emeritus
Posts: 11,562
Registered: ‎08-29-2007

Re: Confused and Frustrated...

Closed or not, they will still be counted in your number of accounts.

 

To my knowledge, although it flags for too many accounts, there has been no evidence of score ding for too many accounts.

 

As for util, add up balances and divide by total CL, this gives you your util %. You want individual util on each card below 9% and overall util on all your cards below 9%.

 

As soon as your new CC balances report, you will see the change in your report.

 

Where are you getting your scores? You show a recent EX score, but EX FICOs are no longer available.

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Member
eaunspa
Posts: 18
Registered: ‎05-17-2008
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Re: Confused and Frustrated...

Thank you for your reply.  I will focus on getting my Util lower and hopefully that will make my score become higher.  I got Experian from experian.com for $15.
5/15/08 TU=678 EQ=698 EX=662
3/9/09 TU=688 EQ: 701 EX=711
6/4/09 TU=729, EQ=740,EX=725
Moderator Emeritus
Posts: 11,562
Registered: ‎08-29-2007
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Re: Confused and Frustrated...


eaunspa wrote: 
I got Experian from experian.com for $15.

It is a FAKO, not a FICO.

 

No direct access to EX FICO scores any longer.

 

Can still get TU and EQ here.

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Member
eaunspa
Posts: 18
Registered: ‎05-17-2008
0

Re: Confused and Frustrated

[ Edited ]

I am so confused.  I want to close accounts because it says I have too many accounts (31)!  First of all I have 5 Student Loan accounts and I'm upset that student loans are not viewed differently since you have to get one very semester, which brings up your number of accounts.

 

2) I have the following Department store cards, LB opened in 9/02, AV 5/00, BB 5/08, IK 06/07 and 1 major credit card 4/06.

 

3) I'm getting dinged because I have 11 accounts with balances.  5 are the student loans, 1 mortgage, 1 car loan, 4 credit cards.  I'm paying off 3 cards (2 department and 1 major CC) this month.

 

4) The raito to revolving balances to my credit limit is 75%.  I don't really understand this but I'm hoping paying off 3 CCs will help this.

 

5) After paying off the 3 CCs, I will have car loan of 11K and CC of 10K (and the 5 student loans which I'm paying off last because they have lowest interest rate).

 

Questions: How long should I wait to see an improvement in my credit score after paying off 3 CCs?

                 Why won't closing 5 department cards help my creidt score? (I would only have 1 CC, 1 auto loan and 5 student loans then).

                 I want to be able to buy a rental property in spring 2010, and I would like to have scores above 760s by then.  Please advise.




eta: This duplicate post was on Tuscani's "Closing Aged Accounts: Yes, It's OK" thread on Understanding FICO Scoring. I moved it here to join this one.

edited this post and the following to get consistent thread titles; nothing else was changed.
Message Edited by haulingthescoreup on 03-19-2009 07:00 PM
5/15/08 TU=678 EQ=698 EX=662
3/9/09 TU=688 EQ: 701 EX=711
6/4/09 TU=729, EQ=740,EX=725
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Community Leader
Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: Confused and Frustrated...

[ Edited ]

eaunspa wrote:

I am so confused.  I want to close accounts because it says I have too many accounts (31)!  First of all I have 5 Student Loan accounts and I'm upset that student loans are not viewed differently since you have to get one very semester, which brings up your number of accounts.


 

Don't worry about the flag for too many total accounts. There seems to be very little real score ding for this, even though you get a flag. And yes, the SL thing is maddening, especially for those who go to grad school.

 


eaunspa wrote:
2) I have the following Department store cards, LB opened in 9/02, AV 5/00, BB 5/08, IK 06/07 and 1 major credit card 4/06.

 

 Are all five of these CC's open? What are the CL's and balances due for each?

 


eaunspa wrote:
3) I'm getting dinged because I have 11 accounts with balances.  5 are the student loans, 1 mortgage, 1 car loan, 4 credit cards.  I'm paying off 3 cards (2 department and 1 major CC) this month.

 

It's always tough when you have lots of installment accounts, because by definition, if they're open, they have a balance.There's a penalty for half or more of all open accounts with balances, so multiple loans make this a real problem. The only solution to avoid this ding is to have at least one more CC than the number of loans, and only let one CC report. Better, have 2 or 3 more. In your case, that would mean 8, 9, or even 10 CC's to counter the 7 loans. You might want to grin and bear this particular penalty.

 


eaunspa wrote:
4) The raito to revolving balances to my credit limit is 75%.  I don't really understand this but I'm hoping paying off 3 CCs will help this.

 

 Revolving util is hugely important for your scores. To determine util, add up all the CL's of your cards, and then all the reported balances, which are generally the balances showing on your statements. Divide the total balances by the total CL. Your balances are reported to the credit bureaus, and they are used in determining how much of your credit you're using at any one time. Ideal total util is 9% or less. 75% is definitely a score-killer, but this is easily turned around by paying off all but one card, and letting the last card report a very small balance, and then paying it off as well before the due date.

 


eaunspa wrote:
5) After paying off the 3 CCs, I will have car loan of 11K and CC of 10K (and the 5 student loans which I'm paying off last because they have lowest interest rate).

 

 Always throw extra money at CC's first. After you have CC debt under control, you can accelerate loan payments if you like, but it won't appreciably affect your score.

 


eaunspa wrote:
Questions: How long should I wait to see an improvement in my credit score after paying off 3 CCs?
As soon as all three lenders update to the credit bureaus, your scores will change. Most update within a day or so of your statement. (Not the due dates, but the dates that your statements post.) Then allow up to a week or sometimes more for the credit bureaus to update.

 


eaunspa wrote:
Why won't closing 5 department cards help my creidt score? (I would only have 1 CC, 1 auto loan and 5 student loans then).

 

 You'd be in even worse shape because of having too many accounts with balances, because you wouldn't have enough CC accounts reporting 0% to balance out the loans with balances.


eaunspa wrote: I want to be able to buy a rental property in spring 2010, and I would like to have scores above 760s by then.  Please advise.

 


If you haven't already, please read Understanding Your FICO ® Score and Credit Scoring 101 (at least the first post.)

These will give you the background knowledge you need to understand what you read here on the forums.
Message Edited by haulingthescoreup on 03-19-2009 07:02 PM
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Member
eaunspa
Posts: 18
Registered: ‎05-17-2008
0

Re: Confused and Frustrated...

[ Edited ]

Thank you for your response.  I'm going to focus on getting my Util down this year and see where that gets me.  I'm also going to look into consolidating my student loans.  Even though that will give me ONE MORE Account, at least it will be 1 account reporting a balance vs. 5 accounts reporting a balance.   Is this a good decision or not?

 

Keep in mind I will do this AFTER paying off 3 cards this month.

Message Edited by haulingthescoreup on 03-19-2009 07:02 PM
5/15/08 TU=678 EQ=698 EX=662
3/9/09 TU=688 EQ: 701 EX=711
6/4/09 TU=729, EQ=740,EX=725
Moderator Emerita
Community Leader
Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: Confused and Frustrated...

[ Edited ]
That ought to work. I hesitate in saying anything more than "ought to", because I'm not personally familiar with this tactic, but it does make sense.

Even if you do, though, keep your CC's open. They do help you over the long run.

I'll bet reducing your revolving util is going to help a lot!
Message Edited by haulingthescoreup on 03-19-2009 07:02 PM
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Member
eaunspa
Posts: 18
Registered: ‎05-17-2008
0

Re: Confused and Frustrated...

I found the following comment under Support Documents:

 

"Don't close unused credit cards as a short-term strategy to raise your FICO score. This approach could backfire and actually lower your FICO score."

 

Does anyone know how long before your score recovers if and when you do close a credit card?  I mean if my score will recover in a year from closing a card, it might be worth trying to close 1 card per year?

 

Thanks!

5/15/08 TU=678 EQ=698 EX=662
3/9/09 TU=688 EQ: 701 EX=711
6/4/09 TU=729, EQ=740,EX=725
Moderator Emerita
Community Leader
Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: Confused and Frustrated...


eaunspa wrote:

I found the following comment under Support Documents:

 

"Don't close unused credit cards as a short-term strategy to raise your FICO score. This approach could backfire and actually lower your FICO score."

 

Does anyone know how long before your score recovers if and when you do close a credit card?  I mean if my score will recover in a year from closing a card, it might be worth trying to close 1 card per year?

 

Thanks!



Do you understand how closing a card can hurt your score? You really need to read Closing Credit Cards (linked in my siggy.)

Closing a card can hurt if you have balances (including on other cards) report. Closing the card reduces your total CL by the CL on that card. This is a straight fraction issue: you'll have the same amount in your numerator (upper number; total balances owed) and a lower amount in the denominator (bottom number; total CL.) This will make your util go up, and depending on how much it goes up, it can hurt your score.

Again, let me repeat: closing cards will NOT help you in this situation. Don't do it!!!
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007

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