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Closing low credit limit cards--good idea or not

rchvmz
Established Member

Closing low credit limit cards--good idea or not

I am a few months out before my Chpt 13 is to be dismissed. I was able to get some CC here in the last 10 months. One is an Indigo( 3 months old) with a $300.00 limit, and another is a First Access card (6 months old)with same limit..

 

Would it be of ANY good/usefulness to close these 2, as they are really sub prime with not much use, or would closing them be detrimental to the age factor?....The oldes card is 10 months. I am going to open a PenFed share loan in 2 weeks. I know there are plenty of you folks who have some great experience that can help me------Thanks in advance folks, I really am motivated to not make the same mistakes again, by learning from you folks. 

Message 1 of 44
43 REPLIES 43
Horseshoez
Valued Contributor

Re: Closing low credit limit cards--good idea or not


@rchvmz wrote:

I am a few months out before my Chpt 13 is to be dismissed. I was able to get some CC here in the last 10 months. One is an Indigo( 3 months old) with a $300.00 limit, and another is a First Access card (6 months old)with same limit..

 

Would it be of ANY good/usefulness to close these 2, as they are really sub prime with not much use, or would closing them be detrimental to the age factor?....The oldes card is 10 months. I am going to open a PenFed share loan in 2 weeks. I know there are plenty of you folks who have some great experience that can help me------Thanks in advance folks, I really am motivated to not make the same mistakes again, by learning from you folks. 


What are the circumstances behind having your Chapter 13 dismissed?

I categorically refuse to do AZEO!

Message 2 of 44
mja1970
Established Member

Re: Closing low credit limit cards--good idea or not

I am wondering this as well.  I also have several low limit cards that I took out when I started my credit rebuilding journey.  I have a Capital One secured card with a $500 limit, a Citi Diamond secured card with a $400 limit, a First Premier card with a $500 limit, an Indigo card with a $300 limit, a Destiny card with a $300 limit, and a Credit One card with a $400 limit.  I also just got a Kohl's charge card last month with a $400 limit, but I definitely plan on keeping that one.  Recently, I've gotten a few cards with much higher limits because my scores have gone up quite a bit, so I'm also wondering what to do with these cards with lower limits.  I've paid them all off and they all have zero balances, with the exception of the Credit One card, which has about a $50 balance.  The last thing I want to do is close all of these accounts and negatively impact the age of my credit, resulting in a score drop.  I've worked much too hard to get to where I am for a score drop and I'm looking to get a mortgage preapproval by next spring, so I don't want to do anythign that could be potenitally harmful.  

Message 3 of 44
rchvmz
Established Member

Re: Closing low credit limit cards--good idea or not

Its being dismissed as it is a 36 month BK-----I will have fulfilled the obligation

Message 4 of 44
OmarGB9
Community Leader
Super Contributor

Re: Closing low credit limit cards--good idea or not


@rchvmz wrote:

Its being dismissed as it is a 36 month BK-----I will have fulfilled the obligation


You mean discharged? There's a difference between "dismissed" and "discharged." Discharged means you completed your payment plan/filing. Dismissed means it basically got thrown out for whatever reason and therefore you're still in debt.


Last App: 05/30/2021
Capital One Auto Refinance Loan

Currently rebuilding as of 04/11/2019.

Starting FICO 8 Scores:




Current FICO 8 scores:


Message 5 of 44
Horseshoez
Valued Contributor

Re: Closing low credit limit cards--good idea or not


@rchvmz wrote:

Its being dismissed as it is a 36 month BK-----I will have fulfilled the obligation


Hmmm, are you sure you're not confusing "dismissed" with "discharged"?

I categorically refuse to do AZEO!

Message 6 of 44
rchvmz
Established Member

Re: Closing low credit limit cards--good idea or not

Yes, my mistake---discharged. At any rate, the question remains about closing these cards, fruitful or not?

Message 7 of 44
Horseshoez
Valued Contributor

Re: Closing low credit limit cards--good idea or not


@rchvmz wrote:

Yes, my mistake---discharged. At any rate, the question remains about closing these cards, fruitful or not?


Okay, cool.  From my perspective it makes a difference in how I'd answer your question.  Since you're getting a discharge, I'm thinking you should temporarily hang on to the low limit cards; they count the same as higher limit cards from the perspective of your FICO calculations.  In your shoes, I'd opt for a high limit secured card or two which, once they graduate, can be keepers in your wallet.  Once you have better cards in hand, then close the low limit ones.  The general concensus is you need three revolving credit cards plus a loan of some sort for maximum FICO bonus points, so as soon as you open your fourth card, close one of the low limit ones; then when you hit four cards again, close another low limit card.

 

As for which secured cards are the best on the market, once again from my perspective; here's a good starting list (in no particular order):

  • Navy Federal Credit Union nRewards (maximum security deposit/credit limit: $50,000)
  • TDBank TDCash (maximum security deposit/credit limit: $5,000)
  • Discover Discover IT (maximum security deposit/credit limit: $2,500)
I categorically refuse to do AZEO!

Message 8 of 44
rchvmz
Established Member

Re: Closing low credit limit cards--good idea or not

I appreciate the replies, however, in my original post, I indicated I am opening a Share Loan with PenFed in 2 weeks----I have 6 CC total, all unsecured, higest limit is 1k-------I can't see any fruitfulness coming from getting a high limit secured card, when data points arent being generated from the limits on a self secured card....Yes?

Message 9 of 44
Horseshoez
Valued Contributor

Re: Closing low credit limit cards--good idea or not


@rchvmz wrote:

I appreciate the replies, however, in my original post, I indicated I am opening a Share Loan with PenFed in 2 weeks----I have 6 CC total, all unsecured, higest limit is 1k-------I can't see any fruitfulness coming from getting a high limit secured card, when data points arent being generated from the limits on a self secured card....Yes?


I'm not sure I understand where you're going with that question.  High limit secured cards provide the same benefits to the card holder as unsecured cards of the same limits (with the exception of reduced rewards in some cases), and when they graduate, they keep their high limits.  The SSL you're opening with PenFed will serve to help you from a diversity perspective.

 

Since you already have six cards, all of which have low limits, do you consider these cards you can grow with over time?  If not, get some good ones and grow them, if some of the unsecured cards are "growable" keep them and close the rest.

I categorically refuse to do AZEO!

Message 10 of 44
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