@FeedMeCredit wrote:I'm definitely looking at it from an utlization perspective, but are there impacts beyond that? Planning to have $0 balances in the next 5 months.
Assuming I have 0% utl in 12+ months when I go to apply for a home loan, will closing these accounts today impact my score negatively in some other way? That's what I'm trying to figure out, but credit scores really are a puzzle!
I just wanted to note that you don't want 0% utilization as that will actually hurt your score. The All Zero Exept One advice above is what I'd strongly recommend.
And stick around here a while. The folks here will help unravel the mysteries of FICO scoring, until they no longer seem mysterious at all.
Maybe you could take a picture of home like the one you hope to buy. Make a few copies. Put one in your wallet, in your car and maybe even on your background screen on your phone. It could help to remind you to think about the money you spend in terms of how it will effect your ultimate goal. Give it a shot it might work.
I agree that in the long run, closing these cards won't have much impact. But...you could keep them (for their history, their presence on your reports) and not only sock drawer them, but FREEZE them. Each card's website/app should have a 'freeze' option, or you may need to call and have a CSR do it. I've never done this, but my understanding is that it in no way adversely affects...anything....but it prevents the account (note that I didn't say 'card') from being used.
Sure, you could unfreeze them at any time so it's definitely not foolproof, but it adds an extra hurdle that may be enough to stop you in your tracks.
That is good advice! I actually "locked" all of these cards last week and that has helped me officially get out of the mindset of using them, I was just thinking to close them since I don't intend to ever use them even if I do reach for a CC in the future due to the high rates, relatively low limits, and poor rewards.
It sounds like closing them will not impact my average age of accounts. I realize closing them will decrease my overall available credit, but if I'm no longer carrying balances and doing the AZEO approach with 3 remaining cards, would less credit overall negatively impact my score anyway?
I also read above that, if I'm going to close them, not to close them all over a short period. Could I ask why? I really value all of this advice, I'm just trying to better understand how creditors (and a future lender) might look at this decision to payoff and close down these cards over a period of 2-3 months.
Fico doesnt really care about total available credit amounts. You can have a great score with $5000 total CL's or $50,000 total CL's. Its the percentage thats reported each month on a single card and then your overall percentage of all card balances. Higher available credit amounts looks good to other companies when you apply for higher end stuff, and eventually its a personal thing for a better word ego thing. Plus you have enough for emergencies if need be. Years ago I did the same as you. Had swipe fever and then it started to rack up. Eventually I closed all credit accounts. I had no credit cards from 2005 until after BK in 2016. But you need credit these days for almost anything. But this time I was older and wiser. The swipe fever never enters my mind. I look at it as it isnt free money. The years I've been on here. Almost all of the folks who hit rock bottom in rebuild. Rebound with a new mindset and it is very very rare they let history repeat itself. There's no reason to close the cards. They're doing more good than harm. Its not their fault. Dont blame the cards. Its just a piece of plastic. It falls on the user and changing their mindset. Just hit the reset button. Swipe your debit card from the bank for now. Funds go low. Stop swiping.
Lastly. The money you send out on payday to pay the cards that was charged for useless stuff could go to you and not a bank. Yes use them for rewards on essential things like gas groceries and so on. Draw the line there. If you want something really bad. Put it in savings. Then use the card for the rewards and then pay it with your savings. You earned it. Much better feeling. My favorite saying is. If you cant pay it, dont charge it. Keep them open. Good Luck!!!!!!
TL;DR = Sleep on it, a week or more.
FWIW, I had a small assortment of credit cards spanning from ~1983 until around 1999. They were okay but not really -that- big of deal to me since I mostly used cash and checks.
The idea of "I don't intend to use them or need them" took hold and I closed them or let them just fade away as the lenders closed them without me even paying attention.
Between 2000 and now I spontaneously took an offer for paypal credit.. I used paypal a fair bit for buying from software vendors, hosting providers and so forth -- all digital delivery type stuff. I also took up an offer one day at sears for a card (#2, the first was long since closed by Citibank due to lack of use) to pay for a pair of high end batteries for my dually -- that card also closed by grantor for lack of use.
Fast forward to 2019.. Nothing in credit alive but PayPal credit with $1500 CL.. But now the appeal of cash back and so forth -and- the gradual loss of any substantial perks for paying cash, my 3rd cellphone since ~1995, etc.. It dawned on me that I could stand to gain a bit more flexibility with credit cards again, without a doubt.
Hindsight is 20/20 so they say. I knew about credit scores and reports only topically.. I really regret that I let a early revolving credit foundation just erode away. My potentially thick, excellent profile was reduced to the fumes of a closed 30+ year old sears card, a 21st century closed sears card and a 99% dormant $1500 paypal credit account. lol
The 30+ year old account is potentially going to fall off this month... and it's only listed on 2 of the big 3 CRA -- along with the other 2 oldest accounts my AAoA is 5 years and 2 months as of today. On the CRA which does not show the 30yr account I have an AAoA of 2 years.
That is diluted with the addition of 5 new credit card accounts (7 once the latest 2 begin reporting) in roughly the last 15 months. I also took out a secured PLC and a secured installment loan from a local bank, which I paid down to ~8% early... However that was a bank loan and it just paid off recently since it's no SSL.
Bottom line, they're going to record all this stuff until you die. You can't go back an undo some things, but it sure pays to think ahead about the cause and effect. I'm too old to probably even come close to resurrecting the thick profile I might of had before I give up the ghost.
All in all, everything is okay... but at this time in life for me, I've got a lifetime of assets to do things with and things can be costly, having to jerk around with low limits, I know, seems to be uhh, silly..
However they are useful and help pave the road forward. Credit will remain to be a gift I guess, so despite sometimes letting my ego gripe about a $1000 credit card that costs me nothing it's still useful and helping get somewhere closer to where I might have been if I'd looked further ahead at my credit so long ago.
