Closing card with short history but low CL?

[Anonymous]

Hi!  This is my first post on these boards, and it looks like there's some great people here from what I've read!  So here's my dilemma:

I'm only 21, so my credit history is pretty new.  I have an AMEX (CL $2,000 , age 3 1/2 yrs), visa (CL $3,900, age 2 yrs 2 mos), Express (CL $1,000, age 3 yrs), Victorias Secret (CL $900, age 2 yrs), a GapCard (CL $300, age 1 yr 5 mos) & a Pier1 card (CL $300, age 2 yrs 2 mos).  Right now, I'm carrying about $90 of total CC debt.  I also have a student loan and an auto loan that I'm current on.  I'm very good with the Amex and Visa about increasing my credit limit with soft inquiries as often as possible.  My current credit scores are EX 641, EQ 641, TR 677.

I was a little irresponsible w/ my cards in college due to no income and my love of shoes.  I have a couple of late payments with Pier1 that was kind of an oversight b/c it was one of those no payments until the new year deals, but not really, and my mailing address was wrong... anyway.  So, I know not to close the Pier1 card until the late payments drop off my report, about 9 more mos.

Right now one of the things it's saying about my credit score is that it's being lowered b/c of low credit limits on the cards.  Maybe I'm just young, but it seems like the limits on my major cards and the Express and VS are OK, being in (or almost in) the thousands.  However, I don't use the Gap or Pier1 card at all, and I'm unsure if they'll give me a credit increase, at least to the point that I'd like to be at.  Further, I know that the 1 yr that the GapCard has been open is taking a pretty big chunk of my average accounts age. 

I've read most everything anyone's posted about closing cards, but I'm sort of confused about a few things.  Would the low credit limit on a closed card still show up as a negative?  In 10 years, when these 2 cards would drop off my report, would it really make that big of a difference?  I don't plan on opening many (if any) more credit cards in my lifetime, so I wouldn't have newer CC accounts to drag down the average age.  I do hope that in 10 years I will have a mortgage, so that will raise my score.

I guess my big question is, would it benefit my score more to close the low limit accounts and risk the dip in 10 years when they fall off, or to keep them open and periodically use/get CL increases? 

Thanks so much for reading all of my info... I appreciate any help!!

Jennilee

[Anonymous]

There is no real reason to close cards without fees unless you can't manage them.

I am VERY supprised by your score- even with lates 6 years old and low UTL- I would expect your score to be a bit higher.

I did notice a little bump in score when I got my fist $5k CL - so just hang on a bit longer and you will get there.

If you make more money now than when you opened the accounts- be sure to update this with the CCC's. 

Scoring wise- it makes zero difference if the lates are on an open or closed account- I do think you have a better shot at GW's on open accounts and would advise you to send GW letters.

[Anonymous]

wait... the lates are 1 1/2 years old, not 6 years..... does it take 7 years for them to drop off???  I thought it was 2 yrs, since that's all that shows on the credit report.  ut oh.  In that case, I have quite a few more lates.  I was also over my limit on the amex a couple of years ago for awhile.  I make a load more money now than I did then; I wasn't making any money b/c I was a student.  That's good to know.  Possible stupid question- what's GW? 

[Anonymous]

yep- 7 years

GW is a goodwill letter asking for them to remove the reporting for the months you were late.

Reead the Credit 101 thread stickyed to the top of this forum.  

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Jennilee wrote:

wait... the lates are 1 1/2 years old, not 6 years..... does it take 7 years for them to drop off???  I thought it was 2 yrs, since that's all that shows on the credit report.  ut oh.  In that case, I have quite a few more lates.  I was also over my limit on the amex a couple of years ago for awhile.  I make a load more money now than I did then; I wasn't making any money b/c I was a student.  That's good to know.  Possible stupid question- what's GW? 

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[smallfry]

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@Anonymous wrote:

There is no real reason to close cards without fees unless you can't manage them.

I am VERY supprised by your score- even with lates 6 years old and low UTL- I would expect your score to be a bit higher.

I did notice a little bump in score when I got my fist $5k CL - so just hang on a bit longer and you will get there.

If you make more money now than when you opened the accounts- be sure to update this with the CCC's. 

Scoring wise- it makes zero difference if the lates are on an open or closed account- I do think you have a better shot at GW's on open accounts and would advise you to send GW letters.

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I would agree with Timothy. Putting the lates aside the one problem that I see is you have very few credit options available to you. Once these lates age more I would most definitely consider a couple more cards with different prime issuers. Try to put nominal purchases on those cards and GW off the lates.

IF AmEx closes you down it seems you have only one other credit option. That isn't a good position to be in. I would not close the cards though. Good luck.

[jaxstraw]

Hi Jennilee,the others have given sound advice but I want to follow up on a point Timothy made.

If you are making more income and are looking for a CLI on your CC's let them know that.

From personal experience lately I was just married. As soon as the honeymoon was over I was on the phone to most of my prime lenders (CU's seem to go on sole , not HHI) to let them know my income had increased by 60k.

Out of 5 CC's , 4 were given CLI'S because of higher income.

If this is a factor in keeping your score down let them know and try to do it without a hard.

Good luck.

Jax
App free for 28 days since 3rd NASA denial

[haulingthescoreup]

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@Anonymous wrote:

.... My current credit scores are EX 641, EQ 641, TR 677.

....Right now one of the things it's saying about my credit score is that it's being lowered b/c of low credit limits on the cards.

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Just wanted to confirm: did you buy all three of your scores here, at myFICO? If these scores came from a credit monitoring service, or if you bought them from TU or EX directly, they're FAKO's. (You can buy your EQ FICO directly from Equifax, though.)

I would also have expected your scores to be higher.

When you look at your credit reports, how many of your accounts are reporting $0 balances? --in other words, not whether you pay them off when you get your statement, but how many show $0 on the statement itself?

If you can do some well-timed payoffs of all but one or two cards before their statements post, it improves your util, which is about a third of your total score.