Should I close my $2,000 Cap1 Secured....

[sphinx313]

For those that have followed my journal, you'd know I have made great strides with my credit and I am nearing the point of being self sufficient with unsecured credit. I have a $2,000 Cap1 Secured card that I grew from $300. Every time I had extra money and nothing to do with it, I sent it to Cap1. It is technically $1,900 cash, the other $100 is the unsecured portion they gave me at my 6 month anniversary.

I've read some nightmares about Discover and their Authorized User policy. My wife was approved for a Discover IT and added me as an AU. To my surprise 3 days later, I received an alert about a new account, and it was that Discover. It has a $1,000 limit which is maintained by me. My wife doesn't work and has no income. The point of bringing this up is that I have another "decent" credit line reporting at $1k.

My fear is that I will hurt myself by closing this account. For one, my utility will take a hit as Kay's and Best Buy currently hold near $1k in interest free purchases, but I could also pay that off instantly with the $1,900 from Cap1. The other thing is, I don't want my highest limit to only be the $1,000 AU Discover IT and a Kay's for $800. I feel like that may hurt me, but I could be wrong. I have some student loans and another installment loan that I could pay off with this $1,900, as currently, the only thing it is doing for me is helping with Utility and showing potential creditors that I have been good with this type of limit.

I still cannot be approved for a Discover IT or any other prime card for that matter. It will probably be 6 months to 3 years before those days come and I am okay with that. Let me know what you think.

[goosedog]

If CAP1 is your longest card for AAOA and also your highest credit limit, you will only hurt yourself by closing it. Your AAOA will take a hit, your UTIL will take a hit, specially if you carry a high balance on the cards. Until you can get approved for a card with a decent limit, i sgugest you hold on to the card. It's not hurting you and its like havin a 2000 security deposit almost. Just continue to build on it.

[guiness56]

Closing a CC will not impact your AAoA.  Open and closed accounts are factored in.  Removing it, on the other hand, would.

Your utilization will only suffer if you carry high balances on your other cards.  If you don't it should not be an issue.  If you do, pay them off before closing it.

Installment loans are not factored into revolving utilization.

[sphinx313]

I do not carry high utilization normally, but I am taking advantage of interest free financing from Best Buy and Kay's to the tune of about $1,000. My overall revolving credit line is $7,300...so obviously if I closed this card it would be $5,300 with $1,000 in util to equal around a 19% utilization or so. As previously stated though, I can pay off those 2 cards for a total of 0% utilization, or obviously leave a small balance on one card equal to near 9% util. I also have the option of giving Capital One another $1,300 to bring me to the Secured Card max of $3,300.

[Dapper_Dan]

Cap1 secured card is not an installment loan as it reports as a normal revolving account (and isn't even tagged as a secured CC).  If you close it, your available credit drops and your credit utilization goes up in percentage terms on your existing balances with other cards.  Your AAOA, which will not really change because you said you've had it for a while.

There's no harm to keeping it open.  If you close it, you might have to go through the same old hoops to reopen.

If you really need the cash you have placed in security, then close it.  If the cash is not a concern, then sit on it and try to open a non-secured account with a similar balance 12 months from now.

The card is essential at rebuilding credit.  If you are able to open a larger line somewhere else, wait several months before ditching Cap1 and taking your security deposit back.

[guiness56]

AAoA will not change just because you close a card.  No matter how long you have had it.

Your utilization would go from around 13% to 19% if you closed it. 

If you want to close it it isn't going to hurt you if, like you said, you used the money to pay off the other CC balances.  But your overall CL would be reduced by $2000.

As I stated before, paying off the installment accounts won't help much since they are not factored into revolving utilization.

[myjourney]

IMHO 

I would not close it for 2 reasons 

(1) the longer you hold it open the better your CR will look to other lenders when you do apply for other TL's it shows you can manage the TL for an extended amount of time. Longer being better.

(2) most secured cards show on CR the same as a credit card so lenders don't know its secured and lenders tend to want to match the limit in an attempt to steal your business and that's a plus for you. YMMV 

[sphinx313]

What installments? Best Buy and Kay's are credit cards with financing sign up bonuses of 12 months interest free. I think there may be some confusion. I have an installment loan, but I know it has nothing to do with my revolving credit or utility.

I think I am going to keep it open. In 6 months it will be a 2 year old card and hopefully by then things are on the rise. 

[guiness56]

---

@sphinx313 wrote:

What installments? Best Buy and Kay's are credit cards with financing sign up bonuses of 12 months interest free. I think there may be some confusion. I have an installment loan, but I know it has nothing to do with my revolving credit or utility.

I think I am going to keep it open. In 6 months it will be a 2 year old card and hopefully by then things are on the rise. 

---

I have some student loans and another installment loan that I could pay off with this $1,900, as currently, the only thing it is doing for me is helping with Utility and showing potential creditors that I have been good with this type of limit.

From your original post.  I was simply stating paying these off will not help your score where paying off the CC debt will. 

[goosedog]

---

@guiness56 wrote:

Closing a CC will not impact your AAoA.  Open and closed accounts are factored in.  Removing it, on the other hand, would.

---

It actually does impact it.

My experian credit report shows a BOA credit card with a 1500 credit limit opened in 2002, and closed in 2006. I recently got a few GE cards  a couple of months ago plus my car loan from last year yet my AAOA is only 9 months. If that was the case, than my AAOA should be a LOT longer than 9 months, dating back to 2002 from my closed BOA or even 2006. Before applying for the GE cards, my AAOA was 1 year 3 months (paying on my car loan for the last 13 months at the time). It dropped to 9 months once all the GE cards were opened in the same month. So i am not sure why people keep saying "it does not affect your AAOA". I beg to differ.