acres90

to close cc accounts or not?

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i have 5 cc accounts, i have 2 from household bank with limits of $300 a piece, 2 capital one with a total combined credit of $1700 and a citi card with about tha much credit. my question is i want to close accounts that charge me an annual fee. how can i close an account without it going bad on my credit?

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The only score that closed CC accounts affect is the "sucker score"...the one that gets you more credit cards. don't worry about it...

Crap 1 is a bottom feeder...they give you multiple low limit cards so that they can charge you penalties for going over...

read my signature.

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Close whichever accounts you'd like to close. It's likely the accounts that you close will still report for another 10 years anyway. Get 2, maybe 3 real credit cards that can grow with you and close everything else. I'm of the opinion that nobody needs 5 credit cards anyway.

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Close the low limit, annual fee cards. You can close them one at a time if you prefer. As long as they are closed in good standing the tradeline will remain in good standing for the next ten years and not affect your average age of accounts.

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Acres90,

How long have you had the cards? If they have been open a long time, why not keep them and just ask for a credit increase. If you're current with your cards and have been, they might give you an increase. The longer you have the tradeline open, but better.

For me, getting a credit card at all, even paying a fee, was my start to repairing my credit rating. I considered the fee as something I bought with my credit card, which was the better credit score.

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If you have had a card a long time, it might be worth keeping it just to not dilute the time you've had the revolving account open. I once closed one of those high annual fee cards that I had for a long time and got punished pretty badly for it on my credit report. At the time I had it for over 3 years and my other cards were used for about a year each.

If you have a good payment history most of those cards will bump your limit up. As mentioned just call and ask. I had a Crap 1 card that started out at $350. The bumped it to $500 on my first anniversary. Six months later I called and asked for a CLI and they bumped it to $700. It never hurts to ask assuming they don't pull another inquiry.

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Honestly, I think you should be more concerned with cultivating your credit and getting better cards with bigger limits. You might just have to tolerate the annual fees until better opportunities come along. Otherwise, your scores will really tank if you start cancelling cards....even dropping one card could tank you quite a bit because your credit limits arn't very high and that could make your utilization shoot way up.

Edited by BarneyFico

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The only score that closed CC accounts affect is the "sucker score"...the one that gets you more credit cards. don't worry about it...

Crap 1 is a bottom feeder...they give you multiple low limit cards so that they can charge you penalties for going over...

read my signature.

A FICO score is hardly a "sucker score" when banks are using it in part to determine what interest rates they charge you...or if they give you credit at all. That goes for house, auto, AND credit cards. I know each use their own variations of FICO but they are all FICO related entities. To ignore your FICO is foolish indeed.

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Sorry, no. If I could legally claim to have had anything to do with writing the software used to produce credit scores, I would point out the following:

The only score us poor consumers are allowed to see is the FICO Consumer Score...which uses almost the same calculations as the FICO Bank Card score. The commercials on TV would have us beleive that the higher this score, the more likely you are to be offered credit. The truth is: the "sweet" spot in the Bank Card score is actually in the 600-680 range. A score in that range tells the CC companies that you are a sucker who will carry a balance and pay them interest (at a high rate) and occasional overlimit or late fees...that's what they are interested in...making money off lending you money.

A high sucker score...in the 750 and above range tells them they'll get their principal back quickly. That's nice, but its not what they're really interested in.

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The truth is: the "sweet" spot in the Bank Card score is actually in the 600-680 range. A score in that range tells the CC companies that you are a sucker who will carry a balance and pay them interest (at a high rate) and occasional overlimit or late fees...that's what they are interested in...making money off lending you money.

A high sucker score...in the 750 and above range tells them they'll get their principal back quickly. That's nice, but its not what they're really interested in.

A FICO score of 740+ (or 720+) will get one a better interest rate....especially in home and auto loans. Thats a known fact. Also, a higher FICO allows one to absorb greater fluxuations in their score thereby avoiding a "threshold" or "borderline' situations where they might not qualify for a loan in they drop too low.

Also, a high FICO will allow someone to get better (more) credit cards on better terms (plus higher limits) and avoid cards like CrapOne etc etc.

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I myself only got 2 credit cards in my whole life with an annual fee. The first one I defaulted, went to 5 different JDB's one of them pass the ball, and it mysteriously disapeared from my cr. The second one I got it an year ago, and ready to cancel, balance is 0 so my next bill I'm calling the bank, if they don't take the anual fee I'm canceling. The only cc I got now is a crap1 with no anual fee, and I plan to keep it until all my collections disapear before aplying to any new card, it got no anual fee and a credit limit of 500. The trick with low limit cards is knowing when they close, and pay them almost in full before the closing date, so when they report the usage is "low", then pay in full or the minimun when due.

Some people say it's better having at least 2 cc for the credit score crap. I would keep only the ones with no anual fee even if the APR is a bit higher, since if you don't use them you'll be safe of paying anything.

As for over the limit fee, just call the cc and opt out, same for your debit card overdraft crap call them and opt out, so you are safe on that.

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A FICO score of 740+ (or 720+) will get one a better interest rate....especially in home and auto loans.
Absolutely true. A high FICO Mortgage Score will get you a better interest rate on a mortgage; a high FICO New Car Score will get you a better interest rate on a new car.
Also, a high FICO will allow someone to get better (more) credit cards on better terms (plus higher limits) and avoid cards like CrapOne etc etc.
Which has nothing to do with what I just said. In fact, the more open credit cards, with or without "utilization", you have, the more likely your mortgage or new car scores will be lower.

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