If I close my 10 credit cards, that I just paid off, at once will that hurt my credit?

Question

My boyfriend & I are trying to plan for the future, specifically home buying & getting married. We are trying to save & rebuild our credit. I have 7 c.c., he has 3 c.c., we have 2 joint c.c.; I have 62.5k in auto loans (we have nothing but our nice cars for sanity--all xtra $ goes to credit..nothing else!). We also have student loans, his were delinquent for 3 years! I have 8k in student loans that Im current & overpay on; he has 80k in student loans that we just made current (cost thousands), stopped the wage garnishments, and plan to refinance them. After bills each month we have about $600 left ea. mo. to save! I just recently obtained a loan for $8500 to pay our cards & pay the back pmts on his loans so the garnishments would stop. In combo w/ his loan issues, I had every credit card available & didnt pay on them when I was 18(pd off now). My score is 540 his is 436...how are we going to get a home & when, are we on the right path? Should I close those pd off cards/leave em open?

HEADLINER REVISED
I was told out of the 12 cards to keep 3 open per ssn or for each of us to use as revolving credit and those should be the cards open the longest regardless of the rate or fees (most of our cards, as you could imagine, have high rates and annual fees) and close the rest so two of the cards are already closed. After I closed them, that is when I was notified that closing your cards at once was a bad idea. So what should I do with my remaining 3 cards--close or leave open?

Oh and if it helps he has two paid off autos on his credit--one already on and one posting; and I have 2 posting not posted yet.

Random:
Do car insurance companies run your credit?

Answer 1

close em three at a time, and keep one with a zero balance. Get a book called "The total money make-over" by Dave Ramsey. It talks about getting out of debt, and how to do it quickly. I have zero debt now after 4 1/2 years of paying it down while maintaining my child support and other bills. It's not easy, and it's not a "right now" solution. It takes patience and perseverance. Read about the debt snowball. It really works well. Keep an emergency savings of a thousand in the bank until debt paid off, then increase it to 3 to six months of household bills. Get the book, it's real good.

Answer 2

Okay every situation is different, but lets work from the bottom up. Your current scores are 540/436, with these scores you are considered a high/very high credit risk. To get decent rates for home loans the minimum you are going to need is a 620, and really should try to get to at least a 650. You will find loans with less of a score, but at VERY high interest rates and fees.

You were delinquent on some student loans but have gotten current. In your case I would not worry about the effect of closing out the cards would do to your score. It will probably lower it, but in the long run it would be minor in comparison to your other history of delinquency. You should keep a few open to maintain a history, these should be your highest limit and lowest fee cards. The ones you keep open, be sure to not go over 30% of your total limit. Only use the cards for what you would normally pay cash for, then at the end of the month pay it off to avoid the interest charges.

I would also not overpay on your student loans, but use that overpayment toward your Credit card and higher interest debt. You also need to be sure you stay current on your bills and pay on-time every time. Every late payment on your report will harm your score.

Answer 3

In your case, closing all of the credit cards with no balances is the right choice. If you're planning for the future, and I'm sure buying a house is in your picture, mortgage company will require you to close those accounts with no balances anyway. Too much available credits and not using them is not good for your credit score. Every credit card companies and loans would afraid that you'll go out and max out all of them tomorrow. They wouldn't give you any more credit than what you already have.

Keep 1 or 2 cards are max. I don't know why people have too many credit cards. This will give them a temptation to buy something they don't need.

Before I bought my house, I closed all of my credit cards that I don't use and keep 1 major credit card and 1-2 store credit cards that I use often. Store credit cards always get pay in full because of the high interest. I just borrow them the money for 30 days without interest and pay them when the bills come.

Answer 4

"no credit is bad credit"
if you've paid off your credit cards, don't cancel the accounts your FICA score is partly calculated by your credit/debt/card history/number of card ratio, if you close out your paid off cards you score may go down because of the high balances left on your other cards. you can start closing accounts when the debts on the other cards are in a good ratio w/ each...or something like that

instead of cutting up cards, you can freeze them in a block of ice...theythey're still around if you REALLY, REALLY, REALLY need them--you just have to wait for the ice to melt)

Answer 5

NO leave them open especially the older ones they give you a credit timeline and keeping them open gives you a great credit to debt ratio. Yes insurance companies do check credit scores, not right but they do. again leave them open but do not use

Answer 6

I here that if you leave a little balance on a few of them it helps your credit rating rather than closing them all out.

Tony

Answer 7

yes, it is best to cut the cards so you will not tempted to use anymore but leave the account open because of the credit histories.
That is what i read somewhere but is always good to seek some professional help from those non-profit organizations.

Answer 8

Everyone elses answer are awesome. The Dave Ramsey book is a true life saver. Big Kudos to him. And to answer about the Car Insurance, yes they do check it out. And it does cause your rates to fluctuate a bit. But over all I don't think it affects it that much.