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Should I close my secured credit card account?


NoRecess
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I applied for a Bank of America (my bank) for a secured credit card with a $500 deposit in 2012 (I opened a savings and two checking accounts with them in 2008.)  They initially took the money out of my account, and then deposited it back in, sending me a letter that my credit was so bad they wouldn't even do a secured card.

 

I tried again for $500 in 2013 and they accepted it.  I have been making payments on time for 12 months.  My current balance is $112 on a $500 limit card.  I requested a limit increase, and they asked, "How much more money do you want to deposit to secure the increase?"  Hmm.

 

My credit score has gone up significantly and is now at 649 with Equifax.  I haven't checked the other two.  So I applied for a Capital One unsecured card, who approved me instantly for $1000.  The interest rate is no higher than the BoA secured card, and it has 0% interest til 2015. 

 

I want to close the BoA card because I could really use the freed up $500 deposit.  However, would it benefit my credit score more to keep this card open?  Will closing the account adversely affect my credit score?  I am trying to get it high enough in the next year to purchase a house.  I don't even want to use the BoA card on principle, but I also hate the thought of them sitting on my unused money, earning (albeit a miniscule amount) of interest on it.

 

Thanks.

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In general, secured credit cards DO NOT have much of an effect on true FICO scores.  If your scores have increased during the time you have had the BofA card, its because you haven't had any significant negatives.

 

IMHO, close the BofA card.  If you need to use plastic (for things like shopping online) use the Crap 1 card but pay it off each month.  Carrying ANY credit card balance does not help your FICO Mortgage scores.

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  • 1 month later...

In general, secured credit cards DO NOT have much of an effect on true FICO scores.  If your scores have increased during the time you have had the BofA card, its because you haven't had any significant negatives.

 

IMHO, close the BofA card.  If you need to use plastic (for things like shopping online) use the Crap 1 card but pay it off each month.  Carrying ANY credit card balance does not help your FICO Mortgage scores.

 

Can you tell me where the information is that you base this on?  A secured credit card isn't reported to a credit bureau it is just reported as a revolving credit account.  The length of credit history does impact his credit score and so if after 12 months he starts over again he will have another 12 months to go to get 13+ months of a positive credit history. 

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Just like a credit card number identifies the debtor, it encodes many things about the card issuer.  FICO can determine what brand (MC, VISA, etc), who sponsors the account (Cap 1, B of A, etc), how the card is classified (debit, credit, secured, etc), and if there is an authorized user ploy involved.

 

FICO algorithms take all of that into the calculations that determine how much a credit score is affected.

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