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Paying off all debt and credit score effect
Posted on 7/24/18 at 7:16 pm
Posted on 7/24/18 at 7:16 pm
About to have most if not all of my credit card debt knocked out. My score is simulated to be 730 with no balances but all accounts (7) still open.
My question is: Would it really ding my credit that badly to close all but 1 of my credit cards accounts?
Going to start saving and mortgage shopping soon and want to know if I should just shred the cards and leave the accounts open or close them all.
My question is: Would it really ding my credit that badly to close all but 1 of my credit cards accounts?
Going to start saving and mortgage shopping soon and want to know if I should just shred the cards and leave the accounts open or close them all.
5
Posted on 7/24/18 at 7:21 pm to jcaz
Leave them open. Available credit never hurt anyone.
Posted on 7/24/18 at 7:23 pm to jcaz
quote:
My question is: Would it really ding my credit that badly to close all but 1 of my credit cards accounts?
Damn straight.
Seriously, we need to know more. How much available credit do you have total and what portion is the one card you want to keep? How old are your cards?
Posted on 7/24/18 at 7:47 pm to S1C EM
I would have about $15,000 in available credit.
Card I want to keep is $7500.
Oldest card is 8 years old.
I'm really leaning towards keeping them all open and shredding the ones I don't need.
Card I want to keep is $7500.
Oldest card is 8 years old.
I'm really leaning towards keeping them all open and shredding the ones I don't need.
Posted on 7/24/18 at 7:51 pm to jcaz
It wouldn’t hurt you to close a few of them. Make sure to keep your oldest cards open.
Posted on 7/24/18 at 7:58 pm to jcaz
If you have a safe or lock box, just put the cards in there. I would have a small amount auto draft and pay off each month.
Posted on 7/24/18 at 8:02 pm to jcaz
If you never had a balance, it wouldn't matter because your utilization would be zero. But say you have 30,000 total credit and a balance of 1,000.......you'd be using 3% of your available credit. If you were to close a few cards and suddenly reduce your available credit to 10,000, that same balance of 1,000 now becomes 10%. It hurts your score.
And there's the average age of accounts. If the one you're keeping isn't the 8 year-old one, then you're hurting yourself there, too.
Leave them open.
And there's the average age of accounts. If the one you're keeping isn't the 8 year-old one, then you're hurting yourself there, too.
Leave them open.
Posted on 7/24/18 at 8:26 pm to S1C EM
Why do you have 7 cards is my question? 1-2 is enough.
Posted on 7/24/18 at 8:28 pm to Double Oh
I guess you don't have kids huh?
Posted on 7/24/18 at 9:03 pm to Double Oh
quote:
Why do you have 7 cards is my question? 1-2 is enough.
Since he has a total credit line of $15k across all of those cards, my guess is because none of the cards on their own have what he feels is a suitable credit line. My daily use card has a higher credit line on its own than all seven of his combined.
My advice would be to call up the issuer of the 8 year-old card and ask for a credit line increase. If he could get that one card up to $15k, he could conceivably close the others with no real change to his score. But of course, if he ever opened another new one, it would have a much more profound effect on the AAoA.
Posted on 7/24/18 at 9:09 pm to jcaz
quote:
I guess you don't have kids huh?
2 kids had a CC for like 5 years i strictly use a debit card. And im perfectly fine without one dont need one .
Posted on 7/24/18 at 9:10 pm to S1C EM
quote:
Since he has a total credit line of $15k across all of those cards, my guess is because none of the cards on their own have what he feels is a suitable credit line. My daily use card has a higher credit line on its own than all seven of his combined.
My advice would be to call up the issuer of the 8 year-old card and ask for a credit line increase. If he could get that one card up to $15k, he could conceivably close the others with no real change to his score. But of course, if he ever opened another new one, it would have a much more profound effect on the AAoA.
Yep get one card with 15K limit thats all you need these days. And then i bet he could manage with a 7500 limit.
Posted on 7/24/18 at 10:11 pm to Double Oh
quote:
And then i bet he could manage with a 7500 limit.
Oh, I'm sure he can probably manage with less than that. It's just how credit scoring models work; you're essentially rewarded for having a lot of credit available, but not using it. I use mine for all purchases and pay off at the end of every month and I MIGHT hit 10% utilization each time. And I have three kids. And a dog.
Posted on 7/24/18 at 10:30 pm to jcaz
It will ding you to close revolving credit accounts. Keep them open and just lock the cards away. It’ll be useful if you ever needed emergency funds and in the event you couldnt pay a card balance in full, its better for your credit score to have a $2,000 balance with $25,000 total lines of credit than to have that same $2,000 balance on only $8,000 total lines of credit available.
Posted on 7/24/18 at 10:34 pm to Tiger Prawn
Thanks you guys!
Posted on 7/25/18 at 5:14 am to jcaz
If there is no annual fee there is absolutely no reason to close them except for one.
If they are store cards or starter cards you might want to replace them with premium cards that offer rewards. If you're not a traveler a good cash back card could be a good replacement.
If they are store cards or starter cards you might want to replace them with premium cards that offer rewards. If you're not a traveler a good cash back card could be a good replacement.
Posted on 7/25/18 at 5:45 am to VABuckeye
Sorry to thread jack, but what effect does paying off all student loan accounts have on CS?
Closing them all would have a huge impact on my average account age, unless they're still "on" your score even after they're closed
Closing them all would have a huge impact on my average account age, unless they're still "on" your score even after they're closed
Posted on 7/25/18 at 6:08 am to jmcwhrter
quote:
Closing them all would have a huge impact on my average account age, unless they're still "on" your score even after they're closed
Exactly. Those are not "revolving" lines of credit. They are loans with a term date; thus, it doesnt have the same effect on your score.
And to answer the first part of your question, when they're paid off, your score will go up, possibly significantly. All depends on what else is going on at the time you pay them off. If you incur a bunch of new debt at the same time, it could be a wash.
Posted on 7/25/18 at 8:05 am to jcaz
Cut the cards but leave the accounts open. Part of your credit score is how much available credit you actually use. The less you use, the better you score. Closing accounts will cause you to have less total credit, therefore increasing the percentage of credit you use, and increasing your overall score
Posted on 7/25/18 at 8:36 am to jcaz
just my experience...
it seemed my credit score would increase when i started not completely pay off credit card completely... i 'd literally leave a $3-4 balance every month.
i'd previous pay everything down to zero each month...and my score never really changed either.
not sure where i heard it....or if it is complete BS.
(but it worked for me)
it seemed my credit score would increase when i started not completely pay off credit card completely... i 'd literally leave a $3-4 balance every month.
i'd previous pay everything down to zero each month...and my score never really changed either.
not sure where i heard it....or if it is complete BS.
(but it worked for me)
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