How does closing an account with an old baddie on it impact score?

[Anonymous]

I have a Capitol One card that still reports as opened and current, but I haven't used it since 2006. It has a 120 day late on it from Oct. 2006. The card was being autocharged for a small insurance policy which I forgot to change after I paid it down to zero. We had moved in this time frame and I thought it was closed so I never called them to change my address.  When I realized it I paid it, but they were completely unwilling to work with me on the reporting. I asked them to close the account after this, but obivously they never did. The card doesn't report a credit limit, just my high balance of $785 and my credit lines total 32,000. My utilization is right at 30%. Would closing it do me any harm or help at all? I want it closed because I hate them, but we are applying for an SBA loan right now and I need every precious point I can muster up. Help!

[p-]

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@Anonymous wrote:

I have a Capitol One card that still reports as opened and current, but I haven't used it since 2006. It has a 120 day late on it from Oct. 2006. The card was being autocharged for a small insurance policy which I forgot to change after I paid it down to zero. We had moved in this time frame and I thought it was closed so I never called them to change my address.  When I realized it I paid it, but they were completely unwilling to work with me on the reporting. I asked them to close the account after this, but obivously they never did. The card doesn't report a credit limit, just my high balance of $785 and my credit lines total 32,000. My utilization is right at 30%. Would closing it do me any harm or help at all? I want it closed because I hate them, but we are applying for an SBA loan right now and I need every precious point I can muster up. Help!

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Closing it won't remove the late, but if it was just one late back in 06 the effect will not be very much.  I would keep it open and pay it down to 8-9% if possible.  Check out the boards here, but I think you'll find that you want all but one card at 0, and one card between 3% to 9% utilization for optimum scoring in that category.

[Anonymous]

This account is at a zero balance. I haven't used it since 06. I only have a balance on my Discover card, which I am throwing $500 a month  and a Gap card with a small balance which will paid off to zero this month. My Utilization was a lot lower, closer to 15% but Discover reduced my credit line from 20,000 to 11,000 and my oldest card (zero balance) reduced my credit line from 15,000 to 7500.  In the very short term I can't get my util down to 10% because we need our cash reserves for the business so I was just wondering if closing it now would help/hurt. I just want to end any relationship I have with them out of principle. They are an awful company to deal with.

[GregB]

Closing it will immediately hurt your total credit limit, which will hurt your utilization. I would used it a bit so they don't close it on you. Pay before statment if you don't want another CC reporting a balance. As you can see by the other two adverse actions on your existing CCs, there is something that may not look good in your reports. Don't change anything else that could hurt you.

To close the account for principle will cost you money and won't hurt them a bit. Be careful.

[Anonymous]

Okay I will keep it open. I haven't used it in 5 years though and even requested they close it in 2006 and they haven't so I will just let it be until we are financed.