Credit Card Confusion...

Ok,
I would like to move out of my condo and buy a house with in the next few years. Right now I am focusing on paying off all credit card debt. However, I keep hearing different things about this.

After I pay off a card should I close the account? (I have been doing this...)

Only now I just saw on TV (Suze Orman Show) that I should pay off the card and leave the account open to improve my credit/debt ratio for my fico score. This will improve my score and help get a better house in the long run....

What do you ladies do? What have you heard?

Re: Credit Card Confusion...

You can close them but not all at the same time, also make sure it says on your report that you closed them.

It is best to close cards like VS, Express, Macys over major banks like Bank of America, MBNA, Chase.

Also be careful of limits, for example Capital One feels the need to raise my limit all the time. I requested they stop doing that since I rarely use the card and I don't like looking like I have more credit then I need.

Right now I have
MBNA (I hate them but I've had them since 1997 so I feel the need to keep it, I have a good history with the jerks!)
Capital One
Bank One
Juniper Frequent Flyer Card

and VS.


I closed Discover, Abercrombie and Bank of America and my Amex Blue Card before closing on my house and still had a high school. All four of them had high limits but I had not used them in years!

I plan to junk Capital One after the first of the year. It has a high limit that I don't need and like 10% interest which is much higher then everything else right now so I wouldn't even use it if I needed too.


Also be careful... Discover hates to close accounts... they will try to get you back for months and months and months.

Re: Credit Card Confusion...

Christy you want to pay off and close all of your high rate ones, like department store and store cards. Close some but not all. You don't want your potential debt (credit card limits) to exceed a certain amount. Also as was said make sure it says YOU closed them. Frankie read 2 books previous to us going for a mortage and they were quite helpful his favorite was The Complete Guide to Credit Repair by Bill Kelly jr. We had nearly perfect credit, with the information from this book he was about to make it flawless. (He was able to take it out of the library) It will go into how many CC's to close and stuff.

Good luck!

Re: Credit Card Confusion...

Do you see a financial advisor? What does he/she suggest? This may be helpful to you in designing a plan for yourself. Also, another book you may want to check out is Smart Couples Finish Rich. Good luck!

Re: Credit Card Confusion...

how do you make sure the CR says YOU closed the account? is there some kind of letter that needs to be written.? do you request that from the customer service rep closing the account? thanks!

Re: Credit Card Confusion...

The CR will indicate the account is closed - it may take a month or two until this is reflected on it though. As for actually closing the account, check with the CC company - each one is different.

Re: Credit Card Confusion...

Never... never... never... close the accounts that you have had for the longest.

Your 'credit history' as it is determined on your credit score is usually based by the longest active account you have.

Even if you close it... and it remains on there... a lot of banks look for the longest active account in determining your creditworthyness.


Do an internet search and you can see there are a lot of 'myths' as to the advantages of closing old accounts.

Maybe if I have time tomorrow ill post a few links if I remember where I found them.

Re: Credit Card Confusion...

Here are some good links about the 'myths' of improving your credit score by closing accounts.

Linky1 - Scroll down to the 2nd article

Linky2 - Read the entire thread for some good information

Re: Credit Card Confusion...

I Used to work in a bank and have experience with debt consolidation. if you choose to consolidate or pay off the cards your should keep 1 that you can use all the time and one for emergencies. if there is more than 2 that you used, then have the limits lowered. this will help with credit score and when its time to borrow money.