I was unemployed for a while and wasn't able to keep up with payments so now my credit is not great. I have 2 cards that have been closed but I have been given assistance by the creditors to reduce payments and interest. So I have those 2 cards that show negatively on my credit report and the 3 cards still open that I am going to pay off that I mentioned in my question.
2006-09-02 08:22:30 · 12 answers · asked by michelle g 1 in Business & Finance ➔ Credit
Theres been some great answers here.
To keep it short:
Want to see your score drop even more? Then close the cards.
Lock the cards up, pull them out every 6 months, buy a McDonalds hamburger, lock the cards up (for another 6 months) and pay in full when you get the statement.
2006-09-02 10:04:39 · answer #1 · answered by echo 7 · 0⤊ 0⤋
I'm a little disappointed by all these answers.
The reason you never want to close an account is because you want to keep the credit history from these cards on your record.
BUT.....these cards were in default, and had late payments. Why do you want to keep this information on your records? It certainly isn't going to help you out any.
Are these cards listed in the negative or derogatory area of your credit history? If so contact the creditor and see if they would delete the negative information, since you did pay off the debt. Note that just paying off the card does NOT remove negative information such as late fees or collections. It simply puts "paid" on your account, but it's still a negative report.
If they won't remove this negative information, cancel the card. It will be a few years before it automatically drops off your history.
Attempt to secure additional sources of credit, but be carefull not to default on them again.
2006-09-02 19:15:18 · answer #2 · answered by Anonymous · 0⤊ 0⤋
In the eyes of the creditors it is much better for you to retain the 3 credit cards and keep the accounts open. The reasoning is this: When a creditor views your credit report they will be able to see that as long as you have your head above the water and you have access to funds you are considered trustworthy and credible. A good analogy would be someone trusting you with holding their money and not spending all of it. Hold on to them. Too many closed accounts signal to the creditors that you may be irresponsible and do not trust yourself with the purchasing power.
2006-09-02 15:41:39 · answer #3 · answered by gjjr2004 3 · 1⤊ 0⤋
Keep them open but cut them up if you don't want to rack up big charges again. Closing the accounts means you'll lose the history of those cards on your report and that can lower your score (especially if you've been paying ontime when you were paying them off)
Also, if all you've had is credit cards, you may want to take out a loan from a bank or credit union to build other credit. The mix of credit you have also effects your score.
2006-09-02 15:27:00 · answer #4 · answered by Vadalia 4 · 1⤊ 0⤋
Think twice before canceling your cards . If you close accounts to boost your score you'll end up making things worst .
You gain points if you're tapping only a small percentage of the total credit available on all your credit cards . But eliminating accounts can reduce that ratio .
dnl.allen Hey , YOUR THE MAN !!!! If we all did that , what a world that would be .
2006-09-02 16:10:53 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I know you'll think this strange, but I have never had a credit card. As a result I don't get into debt. My apartment accounts are paid through my bank as a direct debit and incur no interest. The bank issues me with an ATM card and I live on the remainder of my salary. I carry very little cash on me and if I wish to purchase something, I use the same card called EFTPOS. The salary is paid direct to the bank and is placed in my savings account and earns interest which covers any operating costs. Ergo: Free account. The beauty of this is I never get bills with huge interest, my regular accounts are paid on time, and best of all any wild spending sprees just don't occur because I can only spend what I have in the account. If an emergebcy arose, I would ring the bank and they would permit me to overdraw, but not to buy specials. It is excellent discipline. You see, when you purchase specials on a credit card any savings are immediately lost by the charges incurred. I don't have a miserable life and I eat well. I can go out when I wish to entertainment or wherever and I know that what I buy is all mine at the point of sale. Try it. A life without credit is great. As mama said "If you can't afford it, go without it baby"
2006-09-02 15:47:54 · answer #6 · answered by ? 3 · 0⤊ 2⤋
Actually, closing the accounts is the best thing, even if you cut up the card you could still become a victim of idendiity theft if they are left open. These cards will stay on your credit report for 10 years.
Dave Ramsey http://www.daveramsey.com/ has a nationally syndicated radio show, which deals with rehabilitating credit. His advice might be helpful to you.
2006-09-02 15:32:58 · answer #7 · answered by East of Eden 4 · 0⤊ 1⤋
Closing the accounts will lower your score. If there are no annual fees with these accounts, then keep them open and at a zero balance. Cut up the cards so that you aren't tempted to use them again.
2006-09-04 11:58:39 · answer #8 · answered by shunniem74 5 · 0⤊ 0⤋
I'm no financial expert, but from what I understand, your 'bad debt' is calculated by ratio. You want to owe less than 50% of your total credit limit. Say you have a credit line of $10,000. If you owe more than $5,000 on that, that's a bad ratio. By keeping your accounts open, but with no balances, that helps your credit ratio, therefore helping your credit in general. Hope that helps.
2006-09-02 15:31:16 · answer #9 · answered by paperclip 2 · 1⤊ 0⤋
keeping the cards is inconsequential, its all about what you owe and owed and what you pay/paid
at this point, keep the cards but do not carry any of them on your person, this will reduce impulse purchases
2006-09-02 15:33:31 · answer #10 · answered by capollar 4 · 0⤊ 0⤋