Question about closing accounts and cleaning up

[majortom]

My parents didn't teach me a thing about money. I left the house at 18 and severely screwed up my credit. I'm 25 now and have been slowly rebuilding it. I have a question about what to do about three collection accounts and two credit cards that don't seem worth it to me.

About the three collection accounts....

One was last updated in 8/10 for $319.

Another was last updated 2/1/07 for $198.

The third was last updated 8/09 for $404.

I was really stupid when I was 18 and have been working hard to rebuild my credit. I started a company three years ago and now make more than I ever have in my life. I can totally pay these, but don't know if I should or not.

In addition to those, I have the following on my credit report.

Last updated 8/1/09 Paid, was a collection account.

Last updated 11/09 Legally paid in full for less than full balance.

Last updated 12/09 Paid, was a collection account.

Last updated 9/11 Paid, was past due 30 days (auto loan)

Last updated 10/08 Legally paid in full for less than full balance.

I've gotten a few credit cards since then and pay them in full every month and have never been late.
My credit score has been slowly rising.

Current Accounts (in opening order)

Cap one Secured Card since 10/10 Status: Current, Limit $350 (my first card after screwing up my credit)

Credit One  Bank Credit Card since 8/12 Status: Current, Limit $400 (second after screwing up my credit)

First Premier Bank Credit Card since 10/12 Status: Current, Limit $700 (third after cscrewing it up)

Toyota since 12/12 Status: Current, orig balance $29,024 (I pay double payments every month and am 11 months ahead)

Merrick Bank Credit card since 9/13 Status:Current, Limit $1500 (fourth after screwing up)

I just got approved for a Citi Diamond Prefferred Card with a limit of $5000 with 0% interest for 12 months and no yearly fee. I haven't received the card yet.

Yesterday I got approved for an American Express Business Rewards Charge Card, with 50,000 bonus points and no fee for year one.

My question about the cards involves two of the cards. I'm thinking of closing the Credit One Card and the First Premier Card. Reason being, the Credit One card is charging 8.25 per month as the yearly fee. I just got the statement for the First Premier one today and it has the yearly fee of $49, plus two monthly statement fees (one for $9.30 and one for $14.50).

I only have one thing linked to each card (a phone bill on one and an internet bill on the other). I was considering closing these two, but don't know how it would affect my score. I don't charge much each month, so I don't need them, and they're not cost effective.

What should I do regarding the three collection accounts and the two cards I'd like to close?

Thanks!!

[myjourney]

Bump for help

[p-]

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majortom wrote:... three collection accounts....

One was last updated in 8/10 for $319.

Another was last updated 2/1/07 for $198.

The third was last updated 8/09 for $404.

I'm thinking of closing the Credit One Card and the First Premier Card. Reason being, the Credit One card is charging 8.25 per month as the yearly fee. I just got the statement for the First Premier one today and it has the yearly fee of $49, plus two monthly statement fees (one for $9.30 and one for $14.50).

What should I do regarding the three collection accounts and the two cards I'd like to close?

Thanks!!

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First, go through the DV process on the collections, and then if they are legit seek a PFD.  Start with the most recent, and don't worry too much about the one that is about to age off.

As far as cards go, once you have unsecured cards at 5k, it's time to drop First Premier and Credit One.  Those are both fairly predatory lenders who you should only do business with if you are desperate, and you are not, anymore.  The low limits aren't doing much for your utilization, and even closed they will still continue to benefit your AAOA for the next ten years or so.  The sooner they are closed, the better.  Also, getting those secured deposits back should free up cash to pay off your outstanding collections, or pay down utilization on other cards.

As far as Capital One goes, do a little research.  I'm not up to date on whether they are graduating secured cards or not.  If they are, keep it, and push to have it graduated.  They have been great about product changes for me, allowing my old credit steps platinum to become a 10k World MC.  If there's an annual fee on the Cap1 card, you can probably get it eliminated, too.

If there's no hope of graduation, consider closing the secured card after replacing it with a better one.

Definitely take care of the collections, and get at least 6 months of good history on your new cards before any new applications.

Good luck!