Consolidating our CC. Now what?

[Anonymous]

OK, we may have the opportunity to consolidate all of our CC. We are trying to get a home and want to be careful with our scores. We've read that we should not close any of our cards. Is this correct? Are there certain ones we could close? I've also read that we should keep a small balance on each of our cards, however, then we'll have those payments Plus the consolidation loan. We just want one payment. If we keep a small balance on each, but for the most part, consolidate them, what will that do to our FICO score. Does FICO like consolidation loans or not? Thanks

[Anonymous]

This would be an installment loan. Does that make a difference?

[Anonymous]

CC are revolving loans and count much higher toward scores then revolving. You do not need to keep a bal. on any CC. Just buy something small every 3-6 months, and PIF when the bill shows.

I keep a $0 bal on most of mine. Then I whip it out & buy a candy bar or charge something that I usuallu pay cash for.....elect. cable phone bill......When it appears on my CC bill I PIF, This keeps them reporting and shows good UTIL.

[Anonymous]

OK, so does that mean that consolidating would hurt our FICO scores?

[Anonymous]

Bump. Anyone? It's kind of a major question! Thanks

[Anonymous]

moneybags, not knowing your specifics on your accounts, I'd like to be general in answering.

1.) It's usually recommended to NOT close cc's unless they are costing you money. And NEVER close a cc account with a balance.
2.) FICO, in their scoring models like to see a "mix" of various credit instruments, such as: credit cards, car loans, mortgage, etc. The credit mix accounts for 10% of your overall FICO score. Please look at the pie chart in the "Credit Education" section, of the myFiCO main page:

http://www.myfico.com/CreditEducation/

You can learn about the pitfalls/benefits of closing cc's here:

http://ficoforums.myfico.com/fico/board/message?message.uid=41393#U41393
(thank you Fused)

For maximum scoring benefit, keep the utilization to 1%-9% on both overall and individual cc's.

Hope that helps a little. Keep asking questions! And good luck to you.

[Anonymous]

I wouldn't close the cards unless they have an annual fee.

An installment loan is a lot better than CC revolving credit.

After a few months I would call the CCC and ask for a CLI and lower interest (just so that you have lower interest).

This will boost your CL and your over all your score.

[Anonymous]

Your scores should come up  because CCs will have a bal $0......you might take a hit on a new account BUT  FICO likes a mix of credit...revolving & installment.

Just do not let you CCs go inactive!!!  that will hurt & then when you use them, even for 25 cents  you get hit.

Never close a CC (without good reason)  just use them once every 3-6 months....the amount doesn't matter.

As I said before...I use 1 to pay for groceries and then I PIF  within a few days of it appearing on my new bill. The next month I will use another CC for the same thing or for another that I usually pay cash for.  They do not have to be used every month and you do not need to keep a running bal.

[Anonymous]

Thank you guys for the help. I appreciate it! We've had 4 school derogs removed and hope to pay off, or down these cards, so I'm hoping for better numbers.