Cancel it or leave it open? HELP!

Anonymous · ‎11-17-2014

Okay, so here's the run down. Back in March I opened a credit card with the credit union. My first one in ten years, so I could build my credit score.

I had a car loan with a pretty high interest rate that was opened in October the previous year. I refi'ed the car with the credit union the same day I opened the credit card. It dropped my rate on the car a little.

Last month I refi'd the car again and it dropped the rate by HALF.

I now have 3 new cards with rewards and much higher limits.

Can I close the Credit union card without it killing my score? I don't want to pay the annual fee and I'm not using it or is it better to suck it up and pay the AF to keep that little $1K open line of credit?

joeyoeyb · ‎11-17-2014

From what I understand, closing an account really only affects your utilization. If it's only $1000 & you have 3 other cards with much higher limits, I wouldn't think closing this one card would make much difference.

Anonymous · ‎11-17-2014

Closing account or paying off loan are no different, it will drop your score and your AAoA expecially the CU are old account. But those score that drop will bunch back in a few months. You have good credit mixed.

If I would you I would just leave it open, you have it zero balance on it and its in good standing. Just use it for gas once a month and paid it off or keep the balance less then 9%. In the long run down the road the CU will become beneficail for your needs.

You also stated that you re-finance couple of time, becareful doing that. I know no one like high interest rate, but keep re-financing will also drop your score and your AAoA.

ITs the same as you closing a loan and starting a new account back up again.

I just need my car refinance and my car loan was my oldest on my TL file, when it close and the new loan kick in my credit report. My score degrease a lot as well as my AAoA drop.

MarineVietVet · ‎11-17-2014

@Anonymous wrote:
Closing account or paying off loan are no different, it will drop your score and your AAoA expecially the CU are old account. But those score that drop will bunch back in a few months. You have good credit mixed.

If I would you I would just leave it open, you have it zero balance on it and its in good standing. Just use it for gas once a month and paid it off or keep the balance less then 9%. In the long run down the road the CU will become beneficail for your needs.

You also stated that you re-finance couple of time, becareful doing that. I know no one like high interest rate, but keep re-financing will also drop your score and your AAoA.
ITs the same as you closing a loan and starting a new account back up again.

I just need my car refinance and my car loan was my oldest on my TL file, when it close and the new loan kick in my credit report. My score degrease a lot as well as my AAoA drop.

I'm not sure what you mean here and I apologize for that.

Simply the act of closing an account will have no immediate effect on the AAoA. Closed accounts in good standing usually will report for about 10 years after the closing date.

And it's not always the case that closing an account will lower your scores. It depends on the circumstances.

MarineVietVet · ‎11-17-2014

@Anonymous wrote:
Okay, so here's the run down. Back in March I opened a credit card with the credit union. My first one in ten years, so I could build my credit score.
I had a car loan with a pretty high interest rate that was opened in October the previous year. I refi'ed the car with the credit union the same day I opened the credit card. It dropped my rate on the car a little.
Last month I refi'd the car again and it dropped the rate by HALF.
I now have 3 new cards with rewards and much higher limits.
Can I close the Credit union card without it killing my score? I don't want to pay the annual fee and I'm not using it or is it better to suck it up and pay the AF to keep that little $1K open line of credit?

Hello and welcome.

Not every case of closing a CC will automatically result in score loss.

Here is a very good thread discussing Closing Credit Cards.

Anonymous · ‎11-18-2014

Thank you for responding! I have learned so much from reading these boards! You guys are such a great resource to repairing credit and making things look pretty again!