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Does it hurt my credit score to close a credit card account.


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I have a Cap 1 MC credit limit of $350, stupidly I took them up on their costumer appercation loan of $500 bring my grand total to $850. I pay my credit limit of every two weeks so I have no finance charges, there has been a few times in the last couple of months that I have gone over my credit limit and have recieved an overlimit charge of $29. Well at the begining of this statement, right of the bat I was nailed with an overlimit fee, but I kept all my reciepts this time and have gone back over my statements I should of still had $8.61 in my account. I have called three different times and have gotten three different anwsers to as why I have a OLF, they even did an investegation which came back saying that the money that I said was still there probable went to finance charges but I have none. So I am done with them. I am planing to pay off the entire balance in the next couple of months and then close the account, but my wife is telling me not to close the account but to just shred the card after I get it paid off because she said she read on MSN.com that to close an account will look bad on your credit report and will bring your score down, but keeping the account open and having to pay $.50 a month isn't worth the amount it would cost to send them the money. So if possible could someone please tell me if what my wife says is true?

Thanks D.

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Cap one is a bit strange in reporting, but it should report your high balance as your credit limit. If you say your high limit was $850 then that would be your reported CL by cap one.

By closing the account you will lose the $850 in overall utilization. You should never close an account especially if your open credit is small. For me I have about $60K in open lines and if I closed one for $850 it would not matter. However, let's say you have $3,000 in open lines and you close $850 your taking quite a hit.

In my opinion I would pay off the account and keep it open to help your overall utilization unless you have a huge amount of open unused credit from other sources. Typically don't close any accounts unless a new lender asks you to do so to get a loan. They may do this if they are afraid you have too much at your disposal.

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  • 5 weeks later...

FICO is a strange creature. There is no "set" limit to the amount of lines of credit you can have. FICO likes to see 2-3 revolving accounts, yet I've seen credit reports with 8-10 open accounts and they still had a high score. The positive history and length of that history trumped the number that were open.

FICO places a lot of weight on history, so don't go closing accounts just to get a temporary boost in your score unless it's for something major like a mortgage and your DTI is too close - they can then take the open accounts and calc them into a "potential" to default.

The "ideal" credit history for FICO is 30 years if that's any indication of why not to close open accounts.

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:lol:One reason to close that Capone account is if they charge you a maintenance fee every month or an annual fee, and you do not plan to use it, ask yourself is it worth it to keep this acct. in the sockdrawer and letting them make money off of you? Sometimes closing the door to a small acct., if you have others that are higher limited and fairly low utilization, opens the door for more "Prime".
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  • 2 weeks later...

The CapOne card is the only card I have, and I am charged an annual fee. Sorry I haven't replied sooner but my modem on my computer passed away, and it took me awhile to get permission to use this web site at work. Thank you all for the info so far.

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