QUOTE=Speedwerx;17692]
Understanding the importance of credit history, my question is: If I close the 3 bank cards mentioned, exactly how will this affect my credit score? Also how will this be viewed by future creditors? And are there other variables to be considered in addition to credit history when closing certain accounts?

Thanks in advance for your answers[/quote]

Closing your 3 bank cards removes them from any utilization calculation, which can show an increase in the utilization percentage with your open cards. An increase in the utilization percentage can decrease your credit score.

Thanks for the tips, regarding the collections...the problem is that the collection agencies are a part of a consortium. I take great steps to having them removed only to have them sell the debt to either a sister company or an affiliate! Of course when this happens the debt is then re-dated and the process starts all over again.

only half true. even thought they are re-sold, the bureaus have to go by the initial date of first delinquency in deleting the item from your credit report. So if you stopped paying XYZ bank 2/03 and 4 different collection agencys picked it up, the last being a few months ago...they would all have to be removed per the ORIGINAL date of first delinquency. Trust me...That's how I got all of mine removed.

honeyb - it is interesting about the effects of account closures. The truth, it is specific to your credit report. Those with BK's are in a different pool than those without and the effects are different. In the event the closed accounts had a good track record they will say closed by consumer request (it doesn't matter to FICO if it says closed by credit grantor) and still will have a positive effect on your scores. I played with all three credit bureaus on this and found two to four point drops but no big deal. What I did find was a big deal is average age of all accounts and oldest accounts. If old accounts drop off after ten years that will impact your score (I speak with all seriousness. I lost some old trade lines and saw my oldest accounts twenty years old drop to fourteen years and my FICO score dropped twenty plus points). It also lowered the average age for all my accounts. Closing accounts may start a date that will cause the reporting creditor to quit reporting and then you lose it. Example, I closed two business accounts from Capital One when they found it necessary to report to the consumer credit bureaus (they didn't used to). Now Capital One only reported once October 2009 and in receiving a paper copy of my Experian Credit Report, it shows a drop date. Nice...?

I recently (past 2 weeks) closed out 4 accounts and my FICO scores did not drop, they actually increased. This is probably due to the fact that my overall utilization is 1% and the limits on these builder cards were small and I have an excellent payment history on all of my accounts; no lates; over the limits or high utilizations.

FP Platinum - 525
FP Gold - 525
Express - 350
Bloomingdales - 220 (CLD'd from 800; only used the card once with good payment history).

Colonative - virtually no drop in the scores. Maybe 2 points here and there but not enough that anyone cares. My biggest score hit today is the loss of my accounts dating back to the 1970's where the BK wiped them out in 2001. My average account is now 4.5 years with the oldest 19.5 years. This aging of accounts thing is killing my scores along with the BK. The three bureaus told me that... Here I am a "baby boomer" with an average account age of a newbie!!! According to the bureau... high FICO scores are averaging 16+ years. I will be dead by then. People really need to carefully think about the effects of the big BK. Eight and a half years later and I am still "sub-prime"?! Give me a break. Perfect credit before and after the BK. Oops one blip and it's all over!

I know, I have seen people born in the 50s and 60s with their oldest trade being less than 10 years old. So you know something happened to their credit along the way. Oh well though, when all is said and done you can't take it with you. If the BK alleviated a lot of stress then it was worth it and you have done a good job at rebuilding. USAA doesn't hand out cards to just anybody. That is an accomplishment! But you do have good advice, bankruptcy should be a last resort if at all possible. It wasn't a big deal for most people in the last 15 years because credit was so easy to get. Going forward I think people who file bky might have a harder time than before getting new credit. Something to think about...

Colonative - virtually no drop in the scores. Maybe 2 points here and there but not enough that anyone cares. My biggest score hit today is the loss of my accounts dating back to the 1970's where the BK wiped them out in 2001. My average account is now 4.5 years with the oldest 19.5 years. This aging of accounts thing is killing my scores along with the BK. The three bureaus told me that... Here I am a "baby boomer" with an average account age of a newbie!!! According to the bureau... high FICO scores are averaging 16+ years. I will be dead by then. People really need to carefully think about the effects of the big BK. Eight and a half years later and I am still "sub-prime"?! Give me a break. Perfect credit before and after the BK. Oops one blip and it's all over!

Wanderer your posts always bring smiles, laughs, and sorrow - you can't die in 16 years! We'll miss you!

Colonative - virtually no drop in the scores. Maybe 2 points here and there but not enough that anyone cares. My biggest score hit today is the loss of my accounts dating back to the 1970's where the BK wiped them out in 2001. My average account is now 4.5 years with the oldest 19.5 years. This aging of accounts thing is killing my scores along with the BK. The three bureaus told me that... Here I am a "baby boomer" with an average account age of a newbie!!! According to the bureau... high FICO scores are averaging 16+ years. I will be dead by then. People really need to carefully think about the effects of the big BK. Eight and a half years later and I am still "sub-prime"?! Give me a break. Perfect credit before and after the BK. Oops one blip and it's all over!

Many of you have discussed when to reduce the number of credit cards you carry. My bank's banker (on March 27) told me along with Transunion Credit Bureau that I have too many accounts. Well to give you an idea of what I eliminated since September 2009 here it goes

Did you notice a significant decine in your credit score after closing those accounts? Based on your recent approvals from USAA I would assume that any decline was negligable?

All the "experts" advise against closing a lot of older accounts; however, if you are not in the market for a mortgage or car loan then any decline will be short term and eventually will correct itself.

Many of you have discussed when to reduce the number of credit cards you carry. My bank's banker (on March 27) told me along with Transunion Credit Bureau that I have too many accounts. Well to give you an idea of what I eliminated since September 2009 here it goes: CLOSED: Capital One Business Visa $10,600, Capital One Business Miles Visa $6,000, Capital One Platinum Visa $750, Wells Fargo Platinum Visa $5,000, MMFCU Platinum Visa $5,000, MMFCU LOC $2,000, Barclays/Juniper $1,200/reduced to $500, GEMB Men's Warehouse $1,500 creditor closed for inactivity. This totals $31,350 dollars. Not bad in my mind. Plan to close Wells Fargo Financial Platinum Visa $2,500 (note the interest rate is 27% with an annual fee of $25.00) but they have grace period and so if you PIF the interest is not important. When do we who have had challenges get a break. I have worked very hard since the BK of 2001 to keep a very clean slate and to grow accounts that started at $200 CL's. It has been very tough and now they are on me about too much credit. From 1973 to 2001 I never had a credit line reduction and maintained 15 bank credit cards. Today I have seven bank credit cards and two department store cards. If I knew who I could trust I would drop more cards but who will be there for me that I can count on???

You are so welcome, proud of you.

Congrats! It's always a great feeling when you're debt free.

Well I did it I paid off 10 out of 16 credit cards and paid down the other 6 , Paid off a personnal loan feelin really good now. And after reading about closing credit cards, we are going to just close a couple of the small ones and keep all the rest open for a while until our scores go up. But plan to at least cut the cards up so I wont use them cause I know me and I love to spend. Love this board it has helped me in so many ways in the credit world. Thanks to all of you[/COLOR]

Well, 2 things to take into consideration.... paying off those credit cards is a good thing, because your score will increase due to maintaining a low utilization of credit. Closing them out will reflect a reduced "total" line of credit, which lowers your score because it appears as though your other accounts may be maxed or close to limits or that you may have balances on all your cards excluding the "inactive" accounts/which were closed.

So once you all pay them off, if you can bargain with the creditors to remove your AF or lower it, or do a product transfer to a different card without an AF, I would do it.

To answer your question, specifically....yes closing out accounts can cause a temporary drop in your FICO score. I have experienced this when I closed 3 cards back in March of this year, these were cards from 2006, dropped my score within 2 weeks from 714 to 703. Since then, I have managed to pay off 2 cards which increased my "utilization" points and my score is 712.

Rockin35

Question I just paid off a loan, and now we are paying off all credit cards and closing half of them because of low limits and AF. How bad will this hurt our credit score. and how fast will our score go back up. We plan not to use our credit for another two years our scores are in the low 600 and we need to get them up in the 800 in two years. We do have a mortage loan, and car loan on our credit, and another personal loan and we plan to keep out good limit cards. I'm just scared we will take a hard hit on our score and take even longer to get it to raise

No problem, good luck!

Let us know what's going on every now and then.