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lexusstier
Joined: 30 Aug 2008
lexusstier's page
Posts: 2
128 Magic Points
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Subject: closing credit cards due to lender raising interest rates
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Sat Aug 30, 2008 3:27 am
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| 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? |
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1002543
Joined: 31 Aug 2008
1002543's page
Posts: 82
79 Magic Points
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Sun Aug 31, 2008 7:39 pm
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| 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. |
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anthony
Joined: 31 Jul 2006
anthony's page
Posts: 550
13573 Magic Points
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Mon Sep 01, 2008 8:48 am
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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. |
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Justin
Joined: 17 Jul 2006
Justin's page
Posts: 1093
25288 Magic Points
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Mon Sep 01, 2008 9:19 am
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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 |
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CMBV22
Joined: 08 May 2008
CMBV22's page
Posts: 382
4309 Magic Points
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Tue Sep 02, 2008 3:55 am
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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
fireyone's page
Posts: 4124
1011 Magic Points
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Wed Sep 03, 2008 1:29 am
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| 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. |
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anthony
Joined: 31 Jul 2006
anthony's page
Posts: 550
13573 Magic Points
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Wed Sep 03, 2008 6:25 am
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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%)
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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. |
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fireyone
Joined: 26 Feb 2008
fireyone's page
Posts: 4124
1011 Magic Points
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Fri Sep 05, 2008 12:30 am
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| That clarifies it for me. Thanks for explaining how this works. |
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goodnatured
Joined: 03 Nov 2007
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Posts: 3735
10 Magic Points
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Fri Sep 05, 2008 2:58 am
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great way to break it all down into a nice easy way to understand it, thanks for the great explaination.
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Justin
Joined: 17 Jul 2006
Justin's page
Posts: 1093
25288 Magic Points
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Fri Sep 05, 2008 6:32 am
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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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All the Best
Justin |
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goodnatured
Joined: 03 Nov 2007
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Posts: 3735
10 Magic Points
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Sat Sep 06, 2008 1:41 am
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Thank you justing for the in depth explaination of the credit to debt ratio.
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Goodnatured,
http://cashinpocket.synthasite.com/
for all the ways I make $$ online |
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fireyone
Joined: 26 Feb 2008
fireyone's page
Posts: 4124
1011 Magic Points
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Sat Sep 06, 2008 1:43 am
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| 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. |
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Lisa
Guest
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Subject: Lowering Credit Card interest Rates
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Wed Sep 10, 2008 5:19 pm
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| 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? |
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Mary
Joined: 06 Jul 2006
Mary's page
Posts: 730
17413 Magic Points
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Thu Sep 11, 2008 12:21 pm
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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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Where there's a will, there's a way !! |
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fireyone
Joined: 26 Feb 2008
fireyone's page
Posts: 4124
1011 Magic Points
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Thu Sep 11, 2008 4:33 pm
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| 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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