topic Re: To Close or Not to Close...That is the Question in Understanding FICO® Scoring

To Close or Not to Close...That is the Question

Anonymous — Mon, 24 Mar 2008 20:16:52 GMT

I posted this in the credit 101 topic but am not sure if that was an appropriate place so I decided to post a new topic and see if I can get some advice from those in the know.

Hello All! I want to first start by saying that I love this forum. I am in my early thirties and have just started a business so I have really started learning about personal and business credit. I have perfect credit save for one issue. I had a 60 and 90 day late approx 6yrs 9 mo's ago. It will be off my credit soon enough so I am excited about that. I have a question about closing a revolving account. First of all here are my scores:

I have had TrueCredit for the last two years. It has my scores as follows:

3/23/08

EQ: 780

EX: 709

TU: 702

Here are my FICO Scores:

3/23/08

EQ: 721

EX: 688 (EX Reports my HELOC as a CC and it is bringing my score down!!!)

TU: 731

These scores do not account for the fact that I have completely paid off a quad (GEMB) for $7,000 (9k limit) and paid off $2,500 of CC debt. This now leaves me w/ $200.00 of total debt other than my mortgage and HELOC. The cards will update soon so I am not too worried about that. What I am worried about is what TrueCredit said. Under the factors affecting my score they said I have too much available credit (22K) and I should consider closing an account, and that I did not have a lengthy credit file (Average age is 4yrs 9mos). After reading that I paid off the GEMB Honda Card and asked that the account be closed. This was five days ago that I did this. My reasoning for closing it was based on TC's advice and the fact that it was my newest account (opened in March 2006) and I figured it would make my average account age go up. After reading the posts on the forum it appears that I may not have wanted to close the account. I am confuesd about what I should do. Should I leave the account as closed (I will never use this account again) or should I call GEMB and tell them to open the account back up? I would appreciate any help on this topic. Thanks in advance for your help!

Re: To Close or Not to Close...That is the Question

Anonymous — Mon, 24 Mar 2008 20:32:40 GMT

It would be a good idea to get the account reopened if you can. Closing an existing revolving account will never help your FICO score in the short term.

Keep in mind that the scores you get from TC are not real FICO scores, and are essentially worthless. Much the same can be said about the advice you receive from TC, as well, except that in many cases the advice is worse than worthless; it is counterproductive.

TC is an excellent resource for daily pulls of reports, but that is all it should be used for. The scores and advice are best ignored.

Message Edited by cheddar on 03-24-2008 04:32 PM

Re: To Close or Not to Close...That is the Question

Anonymous — Mon, 24 Mar 2008 20:36:52 GMT

See this thread for a detailed description of the effect closing an existing CC can have on your score, and why you might want to reopen that account if you can:

http://ficoforums.myfico.com/fico/board/message?message.uid=41393#U41393

Re: To Close or Not to Close...That is the Question

Anonymous — Mon, 24 Mar 2008 21:07:55 GMT

Cheddar:

Thanks for the info. I'm glad I found this site because I used to think that TC's scores were gospel truth. I had no idea that the real scores were only available on myfico. It is deceiving by TC to offer scores and advice if they are not accurate. I will never use their score or listen to their advice again. I do agree that it is important for a daily pull service...but that's the extent of it's usefulness!

Well I called GEMB and they said I could not re-open the account because it has been sent to the cra's for deletion. Darn TC and their fraudulent advice! The good thing is that it was my newest account and my util % will be only 1% of total revolving credit available. So I should not take a hit on my credit as I will still have 22k available and only $200 balance.

Anyways...I really thank you for your advice. I am so glad there are people like yourself and services like myfico that actually give accurate and relevant info.

Have a great day!