Will closing accounts help or hurt?

Anonymous · ‎05-15-2007

Hi everyone,

What a terrific resource this is! Okay, I've got too many revolving credit accounts with high balances, a total of 8 accounts with almost $70,000 in credit. I've handled my debt very well and have a FICO score of 703, but obviously, I need to pay this down. I'm every banker's dream.... I'm making them rich and they're doing very little for me in return.

Here's my question. I'm going to pay off 4 credit cards at once, and reduce my balances on the other four. Would I be better off closing the 4 accounts I pay off (it's what I really want to do) or should I just keep them open with 0 balances.

I'm hoping that by closing them, I'll be able to open another account at "0 interest" and transfer some of my unpaid balances to that. I doubt anyone is going to give me any more credit with the other four accounts still open even with 0 balances, but I don't know.

Advice greatly appreciated.

Sophie

Anonymous · ‎05-16-2007

Don't close the accounts. Just keep your balances low. Closing accounts shortens your credit history and lowers your score. Make sure you keep using the cards, just don't carry balances over $100 or so.

Anonymous · ‎05-16-2007

I agree: don't close the accounts unless you have a compelling reason to. One compelling reason would be an annual fee. FICO rewards long credit histories. Additionally, having high available credit (but not using a lot of it) improves your utilization.

Anonymous · ‎05-16-2007

Yes, I hear you. But one of the "Bad" elements in my score is the number of revolving credit accounts I have. Sometimes this seems like such a game. I mean, why wouldn't I want to close an account that charged me hideous interest rates when I had been one week late on a payment. I don't want to do business with them anymore!

Tuscani · ‎05-16-2007

Sophie876 wrote:
Yes, I hear you. But one of the "Bad" elements in my score is the number of revolving credit accounts I have. Sometimes this seems like such a game. I mean, why wouldn't I want to close an account that charged me hideous interest rates when I had been one week late on a payment. I don't want to do business with them anymore!

You need to do what is best for you no matter what impact it has on your score... If the card is costing you money, CLOSE IT! There is no reason to keep a card with high fees unless you are trying to rebuild.

And the "elements" on what is classified as bad are not always true. An open tradeline with 0 derog info only helps you in the long run!