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HomeCredit ForumCredit repair

closing credit cards due to lender raising interest rates

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lexusstier



Joined: 30 Aug 2008
lexusstier's page
Posts: 2



128 Magic Points
Subject: closing credit cards due to lender raising interest rates
 
 Posted on Sat Aug 30, 2008 3:27 am  
Put your question here ... to prevent higher interest rates on some credit cards I declined the lender to do so, in which case the lender closes the account and I just make monthly payments till paid off. Now I've read that closing old accounts has a negative impact on my credit score. Will this also apply to the ones closed because I don't want higher interest rates?
 
1002543



Joined: 31 Aug 2008
1002543's page
Posts: 84



96 Magic Points
 
 Posted on Sun Aug 31, 2008 7:39 pm  
cLOSED ACCOUNT STAYS ON YOUR FILE FOR APPROX. 10 YEARS, CONTRIBUTING TO THE LENGTH OF YOUR CREDIT HISTORY AND THE AVER. AGE OF YOUR FILE. WHEN TL FALLS OFF YOUR REPORT THEN YOU TAKE A HIT IN SCORE.
 
anthony

anthony

Joined: 31 Jul 2006
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Posts: 493



12319 Magic Points
 
 Posted on Mon Sep 01, 2008 8:48 am  
Hi lexusstier
Closing your old accounts would lower your credit score as per the FICO credit scoring model where about 15% of the total score is devoted to the length of your credit history. If you have old credit accounts for which you make regular monthly payments, it is always advisable not to close down the account by paying a lump sum amount. After the payment to the credit account is paid in full, the account will automatically close down. However, in case of credit card accounts, I would always suggest not to close down old accounts operative.
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Anthony Marx

A positive attitude is not achieved by turning a blind eye to the negative, but rather by responding to every situation in the most positive way possible.
You can also visit my blog
http://financewatchonline.blogspot.com
 
Justin

Justin

Joined: 17 Jul 2006
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Posts: 417



10874 Magic Points
 
 Posted on Mon Sep 01, 2008 9:19 am  
Except bankruptcy listing, all negative listing stays on your report for seven years after which it automatically gets removed from the credit report. Bankruptcy may stay in the credit report for 10 years. As far as I know, all open accounts gets listed in your credit report and is either marked as paid or late. Once you pay off the debt in full, the account no longer remains in the credit report but the number of late payments are highlighted in the payment history section. These late payments listing may lower your credit score.
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Justin
 
CMBV22

CMBV22

Joined: 08 May 2008
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Posts: 378



4034 Magic Points
 
 Posted on Tue Sep 02, 2008 3:55 am  
If you have accounts the same age or older than the card you want to cancel your credit history shouldnt be effected.

However, you will want to make sure closing the account wont throw off your debt.income ratio

either way if the intrest is causing debt you can't afford close the account and either pay it or transfer the balance to a lower intrest card. It will be better for your CS than a charge off
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fireyone



Joined: 26 Feb 2008
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Posts: 2858



1966 Magic Points
 
 Posted on Wed Sep 03, 2008 1:29 am  
Please CMBV I just asked this question on anpother post. How does it effect debt/income ratio? I have accounts that I am hoping to close once I get some money. I am wary about leaving them open in case another bad time hits. It is too easy to use them if they are open.
 
anthony

anthony

Joined: 31 Jul 2006
anthony's page
Posts: 493



12319 Magic Points
 
 Posted on Wed Sep 03, 2008 6:25 am  
Hi Fireyone
The lower is your debt to income ratio, the stable you are in the eyes of the creditor. Debt to income ratio means the proportion of your income you spend to pay off your existing debt. For example, if you have an income of $3000 of which you need to spend $100 for repaying credit card debt and $200 for auto payments, your debt ratio or the debt to income ratio would be 10% (300/3000 *100%)
_________________
Anthony Marx

A positive attitude is not achieved by turning a blind eye to the negative, but rather by responding to every situation in the most positive way possible.
You can also visit my blog
http://financewatchonline.blogspot.com
 
fireyone



Joined: 26 Feb 2008
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Posts: 2858



1966 Magic Points
 
 Posted on Fri Sep 05, 2008 12:30 am  
That clarifies it for me. Thanks for explaining how this works.
 
goodnatured



Joined: 03 Nov 2007
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Posts: 3137



5332 Magic Points
 
 Posted on Fri Sep 05, 2008 2:58 am  
great way to break it all down into a nice easy way to understand it, thanks for the great explaination.
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Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!
 
Justin

Justin

Joined: 17 Jul 2006
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Posts: 417



10874 Magic Points
 
 Posted on Fri Sep 05, 2008 6:32 am  
This means that more is out debt ratio, the less we are creditworthy in the eyes of the creditor, because they will find it risky to offer credit to borrowers already having a number of open credit accounts. Moreover, our credit score will also decrease because amounts owed contributes about 30% in our credit score according to FICO credit scoring model.
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Justin
 
goodnatured



Joined: 03 Nov 2007
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Posts: 3137



5332 Magic Points
 
 Posted on Sat Sep 06, 2008 1:41 am  
Thank you justing for the in depth explaination of the credit to debt ratio.
_________________
Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!
 
fireyone



Joined: 26 Feb 2008
fireyone's page
Posts: 2858



1966 Magic Points
 
 Posted on Sat Sep 06, 2008 1:43 am  
Some people do not relize that there actually is a debt to income ratio. When I first heard this at our bank I was like "what". Does make sense to have it though.
 
Lisa
Guest
Subject: Lowering Credit Card interest Rates
 
 Posted on Wed Sep 10, 2008 5:19 pm  
Does anyone have advice for language to get cc companies to lower their interest rates? Is it wise to ask for a specific lower rate or just ask for it to be lowered?
 
Mary

Mary

Joined: 06 Jul 2006
Mary's page
Posts: 324



8704 Magic Points
 
 Posted on Thu Sep 11, 2008 12:21 pm  
Since credit cards are mostly unsecured, the companies charge very high rates of interest. You can only get low interest rates on balance transfer credit cards. The annual interest rates on these cards starts from very low interest rates somewhere around 8.5%. Some of these cards include Citi diamond card, Citi Platinum Selct card, Bank of America Visa cards to name a few. However, the low interest rates on these cards are mostly valid for a period of 12 months.
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fireyone



Joined: 26 Feb 2008
fireyone's page
Posts: 2858



1966 Magic Points
 
 Posted on Thu Sep 11, 2008 4:33 pm  
Thats a good way to do it. Why do credit card companies offer balance transfers? I have seen them as low as 0% for 12 months.
 
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