topic Re: A Few Questions in Credit Cards

A Few Questions

Anonymous — Wed, 25 Jul 2007 20:09:37 GMT

The first question I have is, I have an orchard credit card and have a $59 annual fee. If I pay the balance off the card and cancel the card will that hurt my credit score and if so for how long. The other things to consider is I have a two other credit cards and am receiving two mail in the mail in about a week or so. I do have a bankruptcy from 2002 and a few other collections on my credit report, but I also have some good things on my report. I just received my credit cards last year, so I am in the new phases of re-establishing my credit, so I don't want to hurt it by canceling a card. If it is going to hurt does anyone think they will drop the fee after being with them a year. My recent credit scores are: Fico for equifax- 612 Vantage for experian- 635 Don't have transunion yet Also could someone tell me what all of the abbreviations stand for I have been see in here (ex. bk) and the rest of them as I am new here. Any help would be appreciated, so I can get my credit back where it should be. Thanks Rob L

Re: A Few Questions

Anonymous — Wed, 25 Jul 2007 20:24:45 GMT

Welcome-

I'm not savvy enough to answer questions yet, but here is a link to the abbreviations.

http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&message.id=3866#M3866

Re: A Few Questions

Anonymous — Wed, 25 Jul 2007 20:32:11 GMT

How long have you that orchard card? What is the limit?

Re: A Few Questions

Anonymous — Wed, 25 Jul 2007 20:35:39 GMT

Had the orchard for a year and a limit of 300.

Re: A Few Questions

Anonymous — Wed, 25 Jul 2007 20:39:25 GMT

if you are applying for a car loan or mortgage then dont close it. if you have no plans to get any kind of credit soon Then you can canel it. It will hurt your score in the short run but you will be fine for long term.

Re: A Few Questions

fused — Wed, 25 Jul 2007 20:42:18 GMT

renegaderob18 wrote:
The first question I have is, I have an orchard credit card and have a $59 annual fee. If I pay the balance off the card and cancel the card will that hurt my credit score and if so for how long. The other things to consider is I have a two other credit cards and am receiving two mail in the mail in about a week or so. I do have a bankruptcy from 2002 and a few other collections on my credit report, but I also have some good things on my report. I just received my credit cards last year, so I am in the new phases of re-establishing my credit, so I don't want to hurt it by canceling a card. If it is going to hurt does anyone think they will drop the fee after being with them a year. My recent credit scores are: Fico for equifax- 612 Vantage for experian- 635 Don't have transunion yet Also could someone tell me what all of the abbreviations stand for I have been see in here (ex. bk) and the rest of them as I am new here. Any help would be appreciated, so I can get my credit back where it should be. Thanks Rob L

The only thing you need to concern yourself with when closing a CC, short history or not, is the negative effect it could have on your cumulative Util% on your revolving accounts. There are two UTIL% calculations: one for each CC and a second one which is cumulative and calculates your total UTIL%. Both are very important.
Example:
Card 1: CL 5K, balance 1K = 20% util
Card 2: CL 3K, balance 800 = 27% util
Card 3: CL 2K, balance 100 = 5% util
Add all three together and cumulative UTIL% is 19%
Not bad but again not ideal. Let's see what happens if you close one of them.
Close Card 2:
Total CL is 10K - 3K = 7K total CL
Cumulative: 7K CL, balance 3K = 43%
Getting worse!
Closed and opened CC TLs are weighted and scored equally by FICO. You will not be punished by simply closing a CC as long as it has no derogs reporting with it and your cumulative Util% stays at 1-9%. If you can get any CLIs this will help you to lower your util%.

If you haven't read Tuscani's credit scoring 101 thread, I recommned you do so.

http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=2654

Re: A Few Questions

Anonymous — Thu, 26 Jul 2007 22:57:16 GMT

Great explaintion fused!!!

Re: A Few Questions

Anonymous — Thu, 26 Jul 2007 23:15:49 GMT

If you are ever thinking about closing a CC, always work the exercise Fused provided for your situation. That will generally tell you whether closing a CC is a good idea or not.

Closing a CC is normally only a good idea when it's costing you money in annual fees and you've added "enough" additional credit to satisfy your FICO score.