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What to do?? Cut up cards?

Regular Contributor

What to do?? Cut up cards?

Hi,

 

My husband and I am about 6 months out of a sucessful  chapter 13 BK.  We  have already begun rebuilding our lives with good credit but I over applied and now have many store cards. No balance on them thankfully. However I have a few crap bank cards with low limits like 500.00 on each of the 3 cards. Yesterday we were approved for discover it and a navy fed CC. for a total of 13,000 limit. Thats all we need, we dont need these other crap cards now or any of the store cards. Do I cut all of the cards up that I dont want and then let them cancel during renewal or do I call each one and cancel the cards. If i cancel all the cards i dont want will we take a hit on our scores. Your advice means alot, i love this forum!!

Thank you!

Its a new Beginning!
Discharged 9/26/2017
Message 1 of 14
13 REPLIES
Established Contributor

Re: What to do?? Cut up cards?

I doubt that your score will take that big of a hit if you close the lower limit cards because of their age. 6 months old right?

However, when you call to close those accounts they may offer you limit increases to keep you since it's so close to Christmas.

I would ask for limit increases if denied then I would close them.
Message 2 of 14
Established Contributor

Re: What to do?? Cut up cards?

Btw 3 to 5 cards are about average to maintain your scores.
Message 3 of 14
Community Leader
Super Contributor

Re: What to do?? Cut up cards?

You can do that, just cut them up and let the creditor close the accounts for lack of use.

Most Recent FICO 8 Scores EX601/TU580/EQ589 12/08/2017 Starting scores 553/485/543 08/25//2017
~~~Credit lines~~~~
SDFCU VISA Secured $250
Discover Secured $200
Message 4 of 14
Regular Contributor

Re: What to do?? Cut up cards?

FYI: Letting a creditor close an account may show up as, "Closed By Creditor," or, "Closed By Credit Grantor," on credit reports.

This indication is not ideal, when an underwriter does a manual review of credit. It indicates Adverse Action, which is cause for concern.

If one intends to close an account, it's better to be proactive about it.

That said, it's oftentimes advisable to just get the limits raised, and then proceed to just use each account at least once every year.
Message 5 of 14
Contributor

Re: What to do?? Cut up cards?

This reminds me of my first credit card. I was in a mall and a Jewerly store was having a marketing event.  The guy at the table said "Hey kid, do you want a free set of earings for your girlfriend?"  I didn't have a girlfriend, but I did sign up for their card and got a $50 gift card for free. Never once did I actually use my card, but it stayed open for 4 years before the lender closed it for lack of use.

 

Never did use the gift card either. I was socially akward at the time.  On a humourous endnote, the statements were sent to my home address (I was away at college), and my Mom called me up furious, she was certain that I had gotten some girl pregnant and was buying a wedding ring.

 

Let the cards be, they will age and thicken your profile while you rebuild.  Eventually they will close and 10 years late fall off, but you should be in a better position then.

Message 6 of 14
Valued Contributor

Re: What to do?? Cut up cards?

FICO wants to see 5 revolving accounts open and in good standing for maximum benefit -- assuming the accounts have been open for 24 months.

 

Since you've already made the mistake, might as well close any accounts OVER 5 but let the rest age so in 2 years you have the biggest FICO boost.  Then, don't close any accounts until they're replaced with a prime bank card that is also 2 years old.

FICO8FICO8Visit my posts:
03/1712/17My 11 Rules to Credit RebuildingFree FICO Scores!
550EX
570TU
559EQ
710EX
701TU
734EQ
FICO alert: why did my credit score drop???
Message 7 of 14
Regular Contributor

Re: What to do?? Cut up cards?

Thank you all for your advice. I am going to close some of them and leave 5 open.

 

Thanks again for your input, i appreciate it.

 

Dawn

Its a new Beginning!
Discharged 9/26/2017
Message 8 of 14
Valued Contributor

Re: What to do?? Cut up cards?

It's a huge learning lesson we all go through!  I have 3 cards I got this year that I regret getting, but when I got them I had no idea I would be approved for way better cards in just 30 days...

 

Remember this in the future, too!  Do your math and pre-plan what cards you want that will pay you back or help you financially.  Don't just app for what you are preapproved for!

FICO8FICO8Visit my posts:
03/1712/17My 11 Rules to Credit RebuildingFree FICO Scores!
550EX
570TU
559EQ
710EX
701TU
734EQ
FICO alert: why did my credit score drop???
Message 9 of 14
Community Leader
Super Contributor

Re: What to do?? Cut up cards?


trusty wrote:
FYI: Letting a creditor close an account may show up as, "Closed By Creditor," or, "Closed By Credit Grantor," on credit reports.

This indication is not ideal, when an underwriter does a manual review of credit. It indicates Adverse Action, which is cause for concern.


All credit grantors know that accounts are often closed from lack of use. It is not considered adverse, lacking any other derogatory info.

Most Recent FICO 8 Scores EX601/TU580/EQ589 12/08/2017 Starting scores 553/485/543 08/25//2017
~~~Credit lines~~~~
SDFCU VISA Secured $250
Discover Secured $200
Message 10 of 14