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02-21-2013 12:36 PM
Today I met with a mortgage loan officer.
She said that my recent opened credit card accounts are what's killing my score from reaching 640. There is a total of 11 store cards between my DH and I. We opened all of these because I was under the impression that we did not have enough credit. All have toy limits and have a balance. We are keeping a total of six (6) credit cards opened that are all going on a year in May.
She also said that closing them would reverse the damage. Also my oldest account is only few years old and my DH is only a couple of years old.
Has anyone else had to close new accounts to reverse the damage? I know paying them off will help by bringing down my utilization.
I am going to do what she says, but I wanted to ask about how others were affected by closing new accts.
P.S. I already got a beat down today, don't need another one
02-21-2013 12:55 PM - edited 02-21-2013 01:50 PM
I do not think that closing accounts will do any good in your case. From what I read here is that closed accounts continue to report and probably count towards AAofA for quite some time but not with the CL. My test with 2 cards and AAoA 18 yrs and now 6 cards with AAoA 7 yrs got me a loss of over 50 points so far with much lower util and close to 1% dti. But I would think the main factor for me is the hard pulls and the inq and the number of new accounts compared to the number of accounts I already had (only my assumption) But Fico likes reporting 0 balances on all account and less than 9% on 1 account. If you can pay down the balances and report an ideal balance on 1 account this could probably be a better result than closing accounts. But I am new to this forum since November 12 and have not tested all possible combinations myself yet. Also I do not know if no reporting (N/A) is worse than 0 balance reporting in terms of scores. I am still in experimenting mode myself.
02-21-2013 01:31 PM
Here is a sticky I found here on the forum about closing cards.
02-21-2013 01:36 PM
Closing accounts typically doesn't help you at all. The reason they're hurting you is because you're holding a balance on them. Pay them off and they'll be helping you. You need that sweet spot on your revolving of 1-20%. Figure out which it is for you, then get them there. Appyling for a card hurts in that you get an inquiry for 2 years. Well, you got the cards so that damage is done. Now you're hurting yourself by carrying a balance. Pay them down or off completely and they'll be helping you.
02-21-2013 02:32 PM
Unfortunately many loan officers don't offer good advice regarding how to help improve your FICO score.
Pay the utilization down will certainly help boost your FICO score.
Closing credit cards will never boost your score, and can hurt your FICO score if it causes your revolving utilization to increase.
02-21-2013 04:36 PM
Your AAoA is the sum of the ages of every account on your report, whether open or closed, divided by the number of accounts.Therefore will not help, bringing down utilization and time will help
02-21-2013 04:52 PM
Wow....that loan officer has no clue about what to do to increase your score. As noted above, many LO's don't know.
Do NOT close those accounts. The LO clearly does not know that closing those accounts WILL NOT reverse the damage. Read the stickies here. Good thing you came here before closing those accounts.
If you want a big boost in your score right away, then pay off all of your cards immediately with the exception of one card and make sure that one card reports a balance NO MORE than 9% of your credit limit. For example, if you have a $500 limit; the highest balance you want to report on the card is $45.00
You can do this now and your score will take a jump up - read the board and you will see.
Is there anything else on your report that is holding down the score besides a bunch of cards with balances? (even a dollar counts as a balance).
02-21-2013 06:06 PM
Your LO is giving you bad advice. Closing those accounts will in no way reverse any damage. They just need to age a bit. Make sure your util is down.