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Is it better to close a credit card which has late payments or keep it active?

New Contributor

Is it better to close a credit card which has late payments or keep it active?

I realize my Topic Title is a bit confusing so I'll try to explain.  I have been rebuilding my credit for the last 12 months and have done fairly well (closed on my 1st home in August!).  Over this time, I have opened some new credit cards (see below) but my oldest cards have a couple late payments from 2015.

 

From a FICO standpoint, is it best to keep these old cards active since the late payments are approaching 3 years old or would it be better to just close the cards?  Closing the cards would lower my available credit a small amount and would also significantly affect the AAoA.  Here are my accounts:

 

Cards with Negative Information (all currently have a $0 balance and no negative information aside from what is below)

Capital One - $2000 limit (opened July 2008) - (30 Day late in Oct 2015)

Kay Jewelers - $1200 limit (opened July 2016) - (30 Day late in Sep 2016 and Dec 2016)

Continental Finance - $750 limit (opened Aug 2007) - (30 Day late in Jan 2015, Oct 2015)

Tires Plus Credit Card - $1200 limit (opened Mar 2014) - (30 Day late Sep 2014, Dec 2014, 60 Day late in Nov 2015)

 

Cards with NO Negative Information

NFCU CashRewards - $24,000 limit (opened May 2017) - Never late - $0 Balance

NFCU GoRewards - $10,300 limit (opened January 2018) - Brand new card

Wells Fargo Credit Card - $2,000 limit (opened May 2017) - Never late - $0 Balance

 

I guess what I'm really asking is if late payments are weighted differently on an Open account vs a Closed account.  If I were to close my Tires Plus card (which has multiple 30 Day lates and a 60 day late), would that improve my score if that account is showing closed?  Or it doesn't matter and better to leave them open and keep the balances at $0 and make small purchases and immediately pay them off each month?

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3 REPLIES
Frequent Contributor

Re: Is it better to close a credit card which has late payments or keep it active?

Closing a card should have no different effect on your scores no matter if it has lates or not. The impact of the lates doesn't change if the account is closed or opened. Only close it because you don't want the card anymore. The lates shouldn't be part of the reason.
9/2017 FICO8: EQ:585, TU:549, EX:580 | No opened accounts | 1 unpaid CO, 1 paid CO + related Col | several lates 2.5+ yrs ago
Current FICO8: EQ:703, TU:671, EX:671 | CC Util 2% | 2 paid CO + 1 related Col (deleted on EQ) | 3x 30 day lates 3-6yrs ago
AAoA: 10 to 11 years; Opened Acc Only: 7 months
Credit Length: 20 years
INQ (Eq/Tu/Ex): 2 / 4 (4 for auto) / 6 (5 for auto)
In 6 months, all serious derogatories fall off.
Message 2 of 4
Established Contributor

Re: Is it better to close a credit card which has late payments or keep it active?

Lates have the same effect, whether on a closed or open account. The only thing that will lessens lates is time or removal.

Message 3 of 4
Regular Contributor

Re: Is it better to close a credit card which has late payments or keep it active?

Nope. Don’t close. Hursts score whether open or closed. And you keep it open, the account becomes positive again in 7  years when the late falls off. 



Starting Score: 600
Current Score: Exp = 703 Tran = 706 Equ = 710
Goal Score: 800


Take the myFICO Fitness Challenge
AAoA Exp = 12.2 Equ = 7.5 Tra = 7.4
Inquiry Exp = 1 Equ = 0 Tra = 2
Message 4 of 4