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Closing Accounts - Is that Smart for my situation.


Heath
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Hopefully someone around here can lead me in the right direction.

I've got two years of on time payments behind me on ALL accounts... No new collections on my credit for at least 4-5 years... I've been carrying high balances on my credit cards though so that is why I assume that my scores still won't break into the 600's and the one time they did it was only one and it hit a whopping 608!!! Last time I checked I'm still hovering around 570-580 on all scores...

So here is the situation... I have 7 Credit cards in my name... One with a $2300 limit (this is also the one I've had the longest its providian, now WAMU and they've actually treated me okay) 3 regular capital one cards w/$500, $600 and $800 limits (the $800 card has a $700 balance right now) 1 Clear card $900 limit (paid off this is a card through my employer that they pay directly from my check) and then two from Household Bank one $800 and one $1100 limit... One of them has $700 balance right now...

I also have a fairly new (Nov.) truck loan from Road loans. I've only made 4 payments on it so far (all on time of course and I always pay more than the amount due). We have an FHA Mortgage that we've been in for 11 months again, always paid more than the amount due and on time.

Wife has 3 cards 1 capital one one orchard bank (both paid off) and a clear card (same employer) also paid off... She's also on the truck and the mortgage...

Now I've paid off about $16-18K in debit since Feb... I don't expect scores to jump overnight... But I'd like to get rid of some of these credit cards because I've read that having several cards with low limits can hurt you as well...

Basically I'm curious what I should do next... I want to keep at least 2 credit cards, one for each of us for an emergency, but I'd also like to get my scores up so I can refi my truck (house already is locked in at 6.375% so I'm okay with that for now... Also hoping to get some better credit cards in my wallet with better options and a higher limit... Not so I can utilize them, but more to help my scores and to have for real emergencies...

So, any recomendations???

TIA

Heath

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There's a couple of stickys in the forums that deal with CRA scoring.

Are any of the cards over 50% utilization? Looks like at least 2 are. Get all your cards under 50%, and within a month when all the cards report to the bureaus you should see a bump. If you can get utilization under 35%, that's even better. Are the 2 $700 balances the only ones you're carrying? If you have to, do a BT to another CC to get under 50%, or 35%. Just try to keep all cards under 50% or 35%. If you can PIF all your cards, that's best.

For any cards only in your name, add your wife as an AU. For any cards only in your wifes name, have her add you as an AU. That should add a few more good TLs. Obviously, only do this if the card is in good standing.

Given the choice of 2 CC each with a $1K limit, or 1 CC with a $2K limit, the latter is better.

Ideally, you want to keep cards with the oldest positive history and highest credit limit.

Mortgage and truck loan paid on time are big pluses.

Sounds like you probably have some old negatives. Fighting those is often the fastest way to a higher score. Post some details about your old bads.

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Be careful about closing accounts. You might lose more points (in the History category) than you gain (in Utilization). And be sure not to close any accounts while they still have a balance due.

Utl. calculates up to 30% of the total score. Having so many CC's with high balances is enough to tank your score. The other factor I see from your post is that you have relatively new accounts. Look to see a nice bump as the mortgage loan ages over 12 mos.

Don't work toward a zero balance on your CC's. Zero balances actually cause a slight deduction because they offer no data for the scoring programs to work with. Keeping a minimum of 1% will get you the most points.

You stand to gain a lot from paying down those cards. Balance that against your need for a down payment. And, eventually, you will want to close some of those CC's, just wait 'til you won't need credit or insurance before actually cutting the cord...

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Most of them have fees too thought... Some yearly some monthly. I'd rathe keep that month... I wasn't going to close all of them, just some... So I should just keep onforking out the fees for now? How long should I let this go on?

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If you're worried about having too many cards, and being tempted, freeze some of them, literally. Stick 'em in a ziplock bag, fill it with water, and stick it in the freezer. You can still get to them if you need them for an emergency. Just pull them outta the freezer, and use them in several hours so you've had a little time to think, "Do I really need to make this purchase?" Don't cheat and use a microwave, you might damage the card.

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Who needs a microwave, I have hot water at my house!!!

Banks... As mentioned in the first post:

3 captial one

1 Providian/Wamu

2 household bank

Fee's on all of them vary, but about the smallest is $40 a year, some are $6 a month Wamu is $90 a year but its also the card with the highest limit and has been in my wallet the longest (almost 10 years now!)

None of my cards should be under a year old at this point. All of them with ontime payments now for at least 2 years.

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I say definitely keep the WAMU card. Maybe give 'em a call and see about getting a fee reduction, interest rate reduction and CLI. All they can say is no, and maybe they say yes to one or more.

2-3 CCs is about ideal for scoring. Read the various stickys on scoring. But for now, I would keep all of 'em.

Big thing right now I believe is the $700 balance on an $800 limit and $700 balance on an $800 or $1100 limit. Getting utilization under 35 percent on all cards should be your first step. Do BTs to get it under 35 percent. If you can get the balances down to say under a $100 on the cards with balances, even better.

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I wouldn't close any of them for now, just sockdrawer (pull out every few months and use for something small) and pay off as soon as possible. As mentioned above call and see if they will waive the fee. I have an AmEx Gold (the only account I have with an annual fee), I just called and told them i was seriously thinking of closing account because of the fee and they waived it for this year. I don't know about the cards you have but it is worth a try.

The main thing is utilization. Get all Balances as low as possible, bt some to a card with a higher limit so i shows less utilization. Good Luck!:)++

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Man its hard not to close them... I know I don't want to use them and get them all maxed out again... And honestly will power and I are not friends...

Freeze some of the cards, literally. Stick 'em in a ziplock bag, fill it with water, and stick it in the freezer. You have it if you need it for an emergency, just pull it out and thaw it, but it won't be there immediately for impulse buying.

If you still don't trust yourself, keep the cards, but run a couple of 'em thru the shredder. In a couple of months, call, tell the bank, "I lost my card, I need to get it cancelled, and I need a new one issued."

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I agree with Someonesomewhere about contacting the cc companies and see if they would agree to either 1) eliminate the fee, 2) convert your account to a non-fee account and 3) reduce the interest rate.

I've had a Providian (now WaMu) for a couple of years now. No fee. If you call them and say..."hey, I've been offered a credit card from XYZ with a no fee, 10% fixed rate) and I don't want to have more cards, so it's either match it or I may consider closing the account"...they might just meet your demands...especially if you are paying them on time and they want to keep you as a customer!

And I have never heard of freezing credit cards...I'm still cracking up over that one.

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I agree with CantCU ask them to waive the fees and/or lower APR Ive done it many of times and it has always worked.

One note...it does not work on store cards such as Sears, Target, Home Depot, etc. But major credit cards like Visa and MasterCard...yes it does. Take a look at their websites and see what their credit card offers are...if you are paying higher than "mid-range" interest rates, then negotiate.

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Not sure, but I think I read that over on MyFico forums. Tickled me too. OP over there also mentioned about "not cheating" with a microwave. I'm not sure, but I think if you did nuke a CC, it would probably be toast.

Guessing it would deactivate the magnetic strip...so you would then have to call the credit card company, report it damaged, wait for a new one, then and only then, could you use it for an impulse buy. Not a bad idea, actually!

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