TiggerFan
See Ya, Albert
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Closing credit card accounts
I have a lot of inactive zero-balance credit card accounts.
They were active at one time years ago. Before the divorce.
I've read that closing accounts can actually negatively affect my credit rating, which has been rebuilt. After the divorce.
Kmart, for instance. Goldsmith's.
Current retailers as well.
Should I space closing these accounts out over months, or can I nuke the lot in one fell swoop?
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| 04-17-2008 07:35 PM |
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memphodude
1st String
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RE: Closing credit card accounts
TiggerFan Wrote:I have a lot of inactive zero-balance credit card accounts.
They were active at one time years ago. Before the divorce.
I've read that closing accounts can actually negatively affect my credit rating, which has been rebuilt. After the divorce.
Kmart, for instance. Goldsmith's.
Current retailers as well.
Should I space closing these accounts out over months, or can I nuke the lot in one fell swoop?
I would get rid of most of them and keep one that you would not use that much like, I'm assuming, Kmart.
The main thing you want is to show your are current on active accounts that have been used recently.
however you can never go wrong never using debt except for a house.
have an emergency fund of 3-6 months of living expenses
and save for purchases.
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| 04-18-2008 09:36 AM |
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Harris
We are...MEMPHIS!
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RE: Closing credit card accounts
Good advice.
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| 04-19-2008 05:08 PM |
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TiggerFan
See Ya, Albert
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I Root For: US NAVY
Location: EAST MEMPHO
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RE: Closing credit card accounts
All I am referring to is closing accounts that have been dormant for years.
From what I have read, reducing the amount of credit avalilble to a person negatively affects his / her credit rating.
So, if I close 5 accounts with $2,500 limits, even though they are zero-balance and inactive, I lower my available credit by $12,500. Equifax lists reducing avalable credit as a no-no.
I am worried about the stolen identity possibilities.
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| 04-20-2008 07:45 PM |
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Grateful Tiger
Special Teams
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RE: Closing credit card accounts
You get points for the the utilization of your credit. If you available credit is $10,000 and you owe $1000 then you have utilized 10% of your available credit. If you close out 4 cards that each have $2000 in available credit (total $8000) you now have $2000 available credit and $1000 in credit card debt. You are now using 50% of your available credit. The jump from utilizing 10% of your available credit to 50% is what will hurt your credit score. At least that is how I understand it.
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| 04-21-2008 09:40 AM |
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covingtontiger
Heisman
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RE: Closing credit card accounts
TiggerFan Wrote:All I am referring to is closing accounts that have been dormant for years.
From what I have read, reducing the amount of credit avalilble to a person negatively affects his / her credit rating.
So, if I close 5 accounts with $2,500 limits, even though they are zero-balance and inactive, I lower my available credit by $12,500. Equifax lists reducing avalable credit as a no-no.
I am worried about the stolen identity possibilities.
Equfax is part of the credit scam in this country. Naturally, their advice is slanted.
Dave Ramsey recommends closing all credit card accounts. His advice - live without credit except for your house mortgage.
Others have mentioned the same advice in this thread without naming Dave. His website is http://www.daveramsey.com/
My own personal testimony is that 25 years ago, I was broke and in debt, including credit cards. I cut mine up and paid cash as I went. Now I do not worry about credit scores or available credit, because I do not borrow money, nor do I care what the credit bureau thinks. I have cash savings now, and for big ticket items, we start a savings account (like buying a car), then we pay cash.
I encourage you to do what Dave says "Live like no one else, so later on you can live like no one else."
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| 04-21-2008 03:42 PM |
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Closing credit card accounts
