My husband and I are working our way slowly to being debt-free without a bankruptcy. We recently got a limit raise on our lowest rate APR credit card so we did balance transfers on all of our other cards (there were 6). Since we desperately want to get our Credit Score to move UP (It's only 550 right now), is it best to close all these accounts we just transfered or just cut up the cards and leave the accounts themselves open? We want to do what ever will help our score the most! :) Thanks!
2007-08-27 11:06:02 · 5 answers · asked by tristalelyn 1 in Business & Finance ➔ Credit
Leave the account open just do not use them, by closing them it reduces your available credit to debt ratio which will severely hinder you credit score
2007-08-27 11:28:59 · answer #1 · answered by Pengy 7 · 1⤊ 0⤋
Two answers. Yes and No. I'll explain:
Paying off your debt is a great thing to do. Congratulations! Now here are a couple of things to consider. What's worse. Bad credit or No credit? I'd have to say no credit. I don't know what your current situation is so I can only answer from my experience and knowledge, but 1st ask yourself, "Do I have a problem with spending?" Were your credit cards high because you were forced to use them to make ends meet, or do you have a spending problem? If you can't control your spending, CLOSE ALL ACCOUNTS. That out of the way, here is what you do:
1. Close all Department Store, Gasoline and Non-Major charge accounts.
2. Leave open 2 or 3 major (Visa, MC) cards.
3. If you must use them, never let the balance go above 30 - 40% of the available credit.
4. Wacth your FICO score climb
Congratulations on your refi. Nothing like a fresh start!
2007-08-27 11:17:46 · answer #2 · answered by loancareer 3 · 1⤊ 0⤋
While closing the accounts may hurt your credit score by lowering your available credit limit, keeping a bunch of credit cards open can be a problem. You have to still keep track of them.
Definitely close any store or gas charge cards. Keep open your oldest major credit cards that do not have annual fees. Closing accounts, closes your history too.
Even if closing some accounts causes a slight dip in your credit score, it will rebound quickly.
2007-08-27 11:47:09 · answer #3 · answered by bdancer222 7 · 0⤊ 0⤋
DO NOT CLOSE THE ACCOUNTS.
I know it seems counter intuitive, but a big part of your FICO score is based upon your ratio of credit used vs. credit available.
By closing those cards you drastically reduce your credit available, driving the ratio way up, and your score way down.
Do not charge any more, and pay down as much as you can over time. Do not apply for any more credit then necessary. Over the months, you'll see your score improve.
2007-08-27 11:47:12 · answer #4 · answered by Uncle Pennybags 7 · 0⤊ 0⤋
Cut up he cards and leave the account open. As hard as it is believe what is looked at is how much credit you have compared to your actual use of the credit. Closing your accounts reduces the credit that you have available and lowers your credit score.
I am glad that you and your husband are lowering your debt. Don' t slide backwards.
2007-08-27 11:19:34 · answer #5 · answered by DrIG 7 · 0⤊ 0⤋