     bob & norma (B_n_atlanta) | Thursday, June 01, 2000 - 04:02 pm 
We have a number of credit cards, we are not behind, late or anything like that, we just cannot get ahead so we want to cancel them so we can finally get them paid off. But when I called the first one to do so the operator said it would hurt my credit report to cancel them without paying the balance in full, that I would be better off paying off the card and then canceling it !!!
Is this true ? |
| Christine Baker (Admin) | Friday, June 02, 2000 - 01:55 am
When you close accounts, your outstanding balance to total available credit ratio will possible SUBSTANTIALLY lower your Credit Scores.
Closing them ALL would definitely be very bad for your Scores, even when your balances are all paid off.
Unfortunately, a low Score can increase your car insurance rates and cause all kinds of problems. From the mortgage to the cell phone or pager, they all require high Scores.
And remember that in most places you NEED a credit card to rent a car.
You could just hide the cards from yourselves. Put them in a safe deposit box or just hide them in your house.
If that's not good enough, you could cut them up. The accounts would still show open, but you couldn't use the cards.
That's a rather drastic measure and I'd prefer you kept the cards in one piece for an emergency. |
| Lewin A.R.W. Edwards (Larwe) | Thursday, June 15, 2000 - 02:44 pm
WHOA! WHOA! I was just about to post a question about this type of topic. Here's a little history:
May 99 - arrived in USA
Jun 99 - got a secured Visa
Dec 99 - accepted a solicitation from Providian for an unsecured Visa
May 00 - accepted a solicitation from GM for the GM Mastercard ($1500) and canceled the secured Visa
Jul 00 - canceled my Providian Visa and applied for United Airlines Visa (declined)
I started with a $500 limit on the Providian card, and by the time I canceled it (after only 6 months!) my credit limit was $1950. Plus they had mailed me a solicitation to get a $1000 unsecured MasterCard as well. So they were pretty happy with me, I guess.
I tried applying for two Visas since then - one was even an (Aspire, tweener) solicitation. Turned down for both, which is disturbing. There's no derogatory on my file. The Providian Visa was close to its limit (12% avail) when I canceled, but the DAY I called them, I mailed payment in full. That payment has cleared but the account is still listed as open in my file (guess it will update at the end of month).
Question 1: Did I do a dumb thing by canceling before paying off? How serious a bad thing?
Question 2: I *REALLY* want to have two cards, it helps me keep certain categories of expense separate. If I keep my GM card balance down to say 15% of limit for a couple of months, and verify that the Providian account is listed as closed and zero balance, should I be reasonably confident about applying for another card (any suggestions for a provider?). Or will I have to wait a YEAR for the 2 declined inquiries to vanish?
Grrrrr!!! I wish credit providers would TELL us these things. |
| Christine Baker (Admin) | Thursday, June 15, 2000 - 04:15 pm
I would call Providian and ask if they'd reopen the account.
Every time you apply elsewhere they'll add another inquiry and lower your Scores again.
If Providian says no (maybe your Score is too low due to the inquiries) I'd recommend you go back to a secured card and wait until you get another PREAPPROVED offer or wait at least 6 months before you apply again.
Be aware that getting a bank account, cellphone, pager, insurance, etc. also often results in a credit check. Read what you sign!
And of course try to have a low balance on your GM card when you apply again. Be aware that the reporting LAGS up to several months and paying in full every month does not mean that they'll report a 0 balance. |
| Lewin A.R.W. Edwards (Larwe) | Friday, June 16, 2000 - 02:36 am
Thanks for the information. I'll pull a report at the end of next month and see what's on it. I guess I'll just live with one card until I get another preapproved solicitation. (And I was tearing them up a couple of months ago). I don't want to reopen the Providian account, even if it's possible (which I doubt), because it has no grace period; that's why I canceled it in the first place. Also it will mean another inquiry.
With a bit of luck, Providian reports everything batched at the end of month, meaning the information that I've closed my account will show up simultaneously with the fact that it has a zero balance.
I really don't understand how or why "close over the phone and send immediate payment in full" should drag down my score, and I'm *very* angry that the Providian rep didn't tell me this. It will be very interesting to see the Aspire decline letter. The United letter was "Insufficient Credit File, Insufficient # of Accs Rated Good, and Rapid Increase In Revolving Balance", all of which are fair enough I guess; they must have stricter criteria than my current provider.
Building a credit rating is much easier in the USA than it is back home (Australia), but it's still very time-consuming and frustrating. Grrrrr and double grrrrrrrrrrr. |
