closing accounts?
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| Sun, 01-22-2006 - 9:05pm |
I posted this on the debt q&a board, but got no reponses, so I'm trying it here. Anyone have an opinion or info?
I've been around the boards for a few years, mostly reading because I don't have a lot of time to post. Things are going better for me the last few months, I'm actually making progress with my debt reduction. My goal is to buy a home in the next year and a half, so I'm trying to get rid of the debt and raise the credit score. My situation is this: I have debt in the amount of $10,000 and change, including a car with a balance of just over $2000 (will be paid off in the fall). I paid off one bill last week (takes a payment of $51 a month), will pay off at least one more next week (will take away a payment of $125 a month), and probably more with tax refund. Right now I have 7 credit cards (yes, I know... yuck). I have a gas card that I very rarely use, mostly just once in a while to keep it active. It has a balance of $240 from summer vacation, and I am in great standing on this card. In fact, they just increased my purchase limit. I always pay over the minimum, and once it is paid off I will only use once in a while and pay in full. I have two cards with very low limits ($200 and $300) that are very nearly paid off, will be paid completely in the next 4-6 weeks. The smaller limit card has a yearly fee of $59, the other has a monthly fee of $6. Right now I am thinking that when I clear those balances I will close these two accounts. My credit score is currently 541 (transunion). Can anyone tell me if closing these accounts will hurt my score significantly? I have had them at least 6 years or so, not my oldest accounts, but not the newest, either. Like I said, I want to buy a house in 18 months, so I don't want my score to nosedive, but it's already pretty crappy, so maybe it can't hurt and would be better to do it now so time could pass? Also, anyone have any idea what score range I could shoot for to get a decent home loan rate? I have no bankruptcy, foreclosure, repo or anything like that on my report, just slow pays mainly. Because of my divorce and nearly three years with no child support, I was struggling for quite a while.... it is survival debt. Now I'm coming out of it, and I want to go about this the right way. Help? Advice?
gomom99

Gomom - given that the limits on those two cards are so low, and they're not your oldest accounts, while you may see an immediate dip in your credit score b/c of the closure, the scores will quickly climb back up within just a few months as you pay down balances on the other cards.
All my best,
Danni