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| *Ostroff, Fair and Company>>>Credit |
Closing credit card accounts? |
I was looking to get a small personal loan. ($2000) I was turned down because they said that I have too many accounts open. I have $0 in credit card debt. I do have about 10 accounts that are open with a good amount of limits on them. My score is 738. They told me that I should most of my accounts that I don't use or havent used in years. I only use about 3-4 of them on a regular basis. I heard that closing accounts hurts your score too. So I feel like I am stuck in between a rock and a hard place. I want to do what is best for my credit score. Please help me. This problem sounds familiar. Credit agencies look at your open credit accounts as debt...even if you do not owe on them. This is primarily because it shows how much debt you could get in to very easily so they don't want to risk you getting in over your head. Unsecured debt (credit cards) can be a dangerous thing. If I were you, and you don't have any intention of borrowing more than just a couple thousand dollars, I would do one of two things. Either use your automobile or other personal property as collateral at your local bank (if it has sufficient value). A consumer loan however can sometimes come with a fairly high interest rate. The other option is to make use of your available credit. Contact your credit card holders and ask them what is the best permanent rate they can offer you on a cash advance. Sometimes just to get you back in business with them, they will offer a low rate. This is not the idea situation but it will give you the cash you need. Once you have gotten the money you need, send a letter to those card companies that you do not do business with anymore and ask them to close your account. In addition, send letters to your card companies that you want to keep active...explaining the fact that you no longer need the other cards and are closing them out. Then at least, they will have documentation that you did it for a specific reason. Reassure them that you will keep the account open that you have with them. Most credit reporting agencies will make a notation on your credit report that the accounts were closed at the customers request. This can have both good and bad effect on your credit score, but if it drops slightly, it will come up again quickly within six months of making your regular payments on time. Having a good credit score is basically worthless unless you plan on borrowing for a very large purchase...or if you are seeking a home loan etc. The result of your $2000 request shows that even with a good score, it means nothing if they see potential for problems. why not use one of the existing credit accounts for the 2 grand? Then you could close out a couple and quickly recover your credit score by paying off the $2000 on the remaining card/cards. I live on credit, I do that type of stuff all the time. Just as long as you pay it off inside of that quarter I'm pretty sure you're credit score will jump right back up from cancelling one or two of your accounts. Do what they say, close all but 3 of them. They know what they're talking about. The main reason closing accounts can hurt your score is that they consider your debt relative to your credit lines. As you have no debt, this should not be much of a problem. The other reason is that closing an account might erase your good payment history. For this reason, close the accounts without much history, and the ones that have been inactive the longest. Good luck! hmmmmmmmmm I owe like 18K count your blessings try to live within your means if and when you can |
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