how does it affect your credit report?

Question

i have a credit card which is 31% interest(i didn't really pay attention when i got the card) i have a balance but want to close the account so as the balance goes down the temptation of charging won't be there. if i close the account for that reason and not the lender closing is it better on my credit report?

Answer 1

Yes, it's better for you to close it instead of it being closed by the lender, but if you can pay it down without closing it, that's really the best thing you can do for your credit. Your credit score takes into account a number of things, including your available unused credit and your open credit lines. Believe it or not, it's preferable (credit-score wise) to have a moderate amount of debt on a couple of credit cards than to have no debt or only one card. The reasoning is that, if you are already managing a small amount of debt, you're already experienced at managing debt, as opposed to someone who doesn't carry a balance. Also, you're less likely to go all rock-star, racking up a huge debt you can't pay, if you've been managing a moderate amount of debt for a few years. Makes almost no sense, I know, but it's the credit industry - what do you expect?

Answer 2

To have a decent credit score you need to have some sort of credit open, but it doesn't necessarily have to be this card. If you already have other lines of credit I would recommend closing this account. Any little nudge in your rating, one way or another, shouldn't make as much of a difference on your finances as paying 31% interest.

I've closed accounts with no effect on my credit rating, but then I'm starting with good credit to begin with. I don't know whether the same would apply to you because the agency's scoring methods are very complicated.

As an alternative, you could call the credit card company and ask them to reduce your available credit so that you can't continue adding to your balance. You can also tell them that you are considering closing your account due to the high rate of interest. Some companies are willing to negotiate lower rates to keep a person's business.

Answer 3

No, it is not better on your credit report to close the account, no matter who closes it. You get the most points on your credit score by keeping the account open but keeping the balance close to zero and only using it occasionally, and always paying way more than the minimum payment, on time, every month.

Answer 4

Closing out that kind of account will only help your credit. That is an obscene interest rate. There isnt a lender in the world who wouldnt understand closing that thing out.

Answer 5

I would find a card with a better interest rate and transfer the balance. Also, sometimes if you call and threaten to close the account they lower the interest ~

Answer 6

actually, it looks better if no one closes the account. instead, cut the card up into little pieces to stop yourself from using it and pay your balance off as quickly as possible. once the balance is paid off, the account may close itself - but that is not a detriment to your credit report.

Answer 7

of course. if the lender is closing the account it would only be because you are not making payments and it was charged off. that is bad on your credit report.

Answer 8

You don't want the lender to close it. Don't you have any will power? Just don't use it if you know you can't afford it. Cut up the card. Just make payments.

Answer 9

the less credit cards you have and the less debt you have the higher the credit score. Close out that credit card and pay the balance and you will see the score go up.

Answer 10

It might help a little, but what is going to help you the most is paying your bill on time every month until it is paid off. When you pay your bill on time you build good credit.