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.
