Which is better for your credit? (see details)?

Question

I've greatly improved my credit after a bankrupcy four years ago. I really don't have any huge expenses and a need for credit cards, but I've used credit cards and a small car loan to build back my worthiness. (You see, I may want to buy a home in a few years)

My question:

The very first card I got post-bankrupcy was an ORCHARD BANK mastercard which is known as a credit repair type card. So............... now that I have the other better cards with bigger limits ($6000+) does it look worse for my credit profile to close the ORCHARD account that I have the longest history with (or) does it look worse having a credit repair type card open??????????

Answer 1

You've seen all the other answers, so I'll agree with the consensus, but I'll add an explanation to it by breaking down what makes up your score.

1. Payment history- 35%
2. Total debt vs. available credit- 30%
3. Length of time establishing credit- 15%
4. Types of credit established- 10%
5. Inquiries and new accounts- 10%


Since you established the Orchard Card first, closing that account would disrupt #'s 1,2, & 3. You shorten active payment history for open accounts, the available credit which would give the appearance that you owe more than you're able to borrow, and also shorten the average age of accounts giving the appearance that credit's been established more recently than it has.

I also have an Orchard Card for sometime now, and I've managed to work my way up to a better card. It doesn't matter on your credit report what kind of card you have, the most important part is that you're paying on time.

So, follow the advice that everyone else has mentioned and don't close it.

Answer 2

Closing the card could lower your available credit limit which would increase the debt to limit ratio. Also when you close the account, you close the history.

No one is going to deduct points because Orchard is known as a credit repair type card. Besides, your bankruptcy will still be showing on your credit report.

Answer 3

DONT CLOSE THAT CARD!

Most lenders look at several things: open available credit (those cards and lines with low or no balances) as well as several diffferent kinds of credit..credit cards with banks, credit cards with department stores, even gas cards are looked at as different revolving credit sources. Also loans, lines of credit. mortgages, etc.

Here's the biggest thing: Most underwriters (the folks who approve/deny the credit) generally don't know the companies who have extended that credit to you.

When they see your credit report they are looking at debt to income (how much of the credit that was extended to you have you used in relationship to your stated income)...or, how much open credit do you have?

And....what you have been doing during the last 2 years. Have your balances been high but recently paid down in the last 2-3 months? Or has ALL your credit been inline.

Knowing all of this...the most common myth on credit reports is "closing credit cards is better" ...when actually it's not!!!
It lowers your "open available credit". Especially one with a long history.

Pay it to a zero balance but keep it open. It will reflect a "pays on time" on your 30/60/90/120 and will show a LONG good credit history.

And always...keep your balances under 35% of the total open available credit.

Hope this helps,
Tj

Answer 4

Orachard Bank will show up on your credit report for the next 7 years whether or not you close the account.

It is better to keep it open but not use it. This is because keeping it open shows that someone is willing to give you credit. By not using it you are managing your debt load wisely and showing that you are not maxing out all your available credit. Closing it could actually hurt your credit score snce it will decrease your amount of available credit.

Answer 5

I think you should keep that card open. Just because the other history on your report is negative. You can close that card after a few years of building history with the new one. Even if you never use it.

Answer 6

A small personal bankruptcy . I found interesting information about your answer & options here. http://all-debt-consolidation-loan.blogspot.com/2007/08/personal-bankruptcy.html Good luck!