topic Re: Should I Close Some Of My Cards in Rebuilding Your Credit

Should I Close Some Of My Cards

DECODER — Sun, 14 Apr 2013 22:10:26 GMT

so ive been working on rebuilding credit after my bankruptcy which was in 2009 and im trying to figure out if i should close some of my lower cards i dont really use them but i dont want it to affect my score because ive only had them for about a year or so and some are newer cards what i have now are listed below but im thinking should i cancel the creditone,orchardbank,capitalone secure,first premier bank i dont use them and they have $0 balances my fico score varys between 640-650

Walmart $1300 Limit This Card is about 3 months old

Credit One $400 Limit

Orchard bank $300 Limit

First Premier Bank $750 Limit

Target $400

Capital One Secured $500

Capital One Platnnium $750

Just Got Chase Freedom 2 Months Ago $1000 Limit

Re: Should I Close Some Of My Cards

Anonymous — Sun, 14 Apr 2013 22:23:07 GMT

Sorry I can't answer your question but I want a Target redcard in the worst way...what was your score and credit profile like when you got yours?

Re: Should I Close Some Of My Cards

Cali_Credit — Sun, 14 Apr 2013 22:43:32 GMT

I'd start with First Premier for sure! Credit one will normally waive any monthly fees if you call and cancel, if not i'd Axe them also. I'd call Cap 1 for increase(EX Office Soft Pull) The Orchard is a Hard pull so id atleast call for a Annual Fee Waiver on that card

Re: Should I Close Some Of My Cards

DiabolicallyRandom — Mon, 15 Apr 2013 02:51:54 GMT

I would axe the First Premier and Credit One, even if they offer to waive fees it will only be temporary and their fees are beyond ridiculous. I would try to give the Orchard time for the conversion to Cap 1 to complete to see what it becomes. If an annual fee is coming up, call and try to get it waived.

Re: Should I Close Some Of My Cards

Lasardo — Mon, 15 Apr 2013 05:06:48 GMT

I am in the same boat with my 1st premier but it is my oldest account and I can not close them, I am afraid it would impact my score significantly.
I would call and see if they will reopen your card within a certain timeframe.. Some cards will do that, it may require a inquiry but that way you can see the impact to your score and if it is a huge impact.. Reopen it .
My friend closed out all her cards for the same reasons and lost over 100 points so think on it seriously.

Re: Should I Close Some Of My Cards

Lasardo — Mon, 15 Apr 2013 05:02:17 GMT

I just found this and hoped it would be useful..

Closing Credit Cards [ New ]
Options
‎09-23-2008 06:03 PM - edited ‎09-03-2010 10:58 AM

CLOSING CREDIT CARDS

THE FACTS

Closing a CC (credit cards) does not lower your FICO scores in and of itself. When deciding to close a CC there is two important things to consider. In the short-term, closing a CC can have an adverse affect on your UTIL percentage calculations and this in itself can definitely lower your scores. In the long-term, a closed CC in good standing (nothing derogatory reporting) with a $0 balance will generally be deleted from your CRs (credit reports) after 10 years. Once this account is deleted, you lose the history and age and this might lower your scores.

SHORT-TERM

The most important factor to consider when closing CCs is the affect on your cumulative UTIL percentage calculation; this is the total sum of all of your CC’s CLs (credit card limits) divided by the sum of their balances.

Utilization Percentages

To fully understand what Utilization percentages are, you must understand FICO scoring has two types of util percentage calculations, one that looks at the extent of utilization on individual revolving accounts (i.e. CCs, overdraft protection and sometimes Heloc’s) and the other is cumulative and looks at the extent of utilization on all of your revolving accounts.

Example

Card 1: CL 5K, balance 1,000 = 20 percent util
Card 2: CL 3K, balance 800 = 27 percent util
Card 3: CL 2K, balance 1,000 = 50 percent util

The total CL (credit limit) is 10,000 and the total balance is 2,800, so the cumulative UTIL is 28%. Not bad but not ideal.

Let's see what happens if you close one of them.

Close Card 1# and pay off the balance:
Total available credit decreases from 10K to 5K

Cumulative Utilization: 5K CL, balance 1.8K = 36 percent
YIKES…Getting worse!

Closed and opened CC TLs are weighed and scored equally by FICO. You will not be punished by simply closing a CC as long as it is in good standing, has a $0 balance and your cumulative Util remains at 1-9 percent. Increasing the CLs (credit limits) on the cards you plan to keep open before you close the card(s) you don't want might be helpful as this too helps to keep your Util percentage low.

Also open and closed accounts age the same. Closing a CC has no affect on average age of accounts or credit history length.

Tidbits (this section is courtesy of moderator, Lel)

- If a closed CC account with a balance continues to report the original credit limit, then both the balance and the CL of the closed account will be used in the utilization calculations.

- If a closed CC account is reporting a zero CL, even if there is a balance on the CC, the card will not be included in the calculations.

- If a closed CC account is reporting a non-zero CL but has a zero balance, the card will not be included in the calculations.

- If a closed account reports a CL that is equal to the balance (balance chasing), then this will be included in the calculations. This is the worst-case scenario with regard to utilization.

LONG-TERM

In the long-term, closing a CC in good standing with a $0 balance will generally be deleted from your CR after 10 years. Once this account is deleted, if your length of credit history and/or average age of accounts decreases in the number of years, your scores might drop.

FINAL NOTES

In the short-term, there should be no adverse affect to your FICO scores, average age of accounts, or the length of your credit history, provided there is no increase in your util% calculations after you close any CC(s). In the long-term, a CC in good standing (nothing derogatory reporting) with a $0 balance will generally be deleted from your CRs (credit reports) after 10 years. Once this account is deleted, you lose the history and age of this TL and this might lower your scores.

Re: Should I Close Some Of My Cards

DiabolicallyRandom — Mon, 15 Apr 2013 05:03:19 GMT

Closing cards doesnt impact your score. Closed card are still factored into you AAOA. However, it could effect your utilization.

Re: Should I Close Some Of My Cards

DiabolicallyRandom — Mon, 15 Apr 2013 05:03:39 GMT

Or you could just read that lol

Re: Should I Close Some Of My Cards

DECODER — Wed, 17 Apr 2013 03:39:06 GMT

i wana say i got target around 600 score