Should I close these credit accounts?
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It is my goal to become debt free in 2008 and raise my credit score. In the last few months, I have paid the following in full:
car loan (paid off 6 months early- just got title)
Macy's
Ann Taylor store card
Best Buy
Nordstrom
I have these credit cards left (I want to pay them in full before July)
Mastercard- 2,400
Visa 2,500
I still have the various store card accounts open. Should I close them? Will this raise my credit score? What else can I do?
** I still have a ton of student loans in which I make the minimum payment every month and another bank loan after all this.
Please give concrete advice.
Should I close these credit accounts?Everybody's given their "concrete advice", but now I'll give mine with stats to prove it. If you're concerned with your score, you should know what makes up your score:
1. Payment history- 35%
2. Total debt owed to available credit ratio-30%
3. Length of time establishing credit-15%
4. Types of credit established-10%
5. Inquiries and New accounts-10%
The top 3 factors affect your score the most, and you should be careful to close accounts because you shorten the total available credit, payment history, and the average age of the accounts.
My advice is this. If you must close anything, I would close some of the department store cards. But even before doing that, I would total up the available credit from all the cards you're wanting to close and I would request line increases on your Visa and Mastercard that would match the available credit that you would lose by closing the department store cards. This way, your score won't take a hit from losing any available credit. Another thing you may want to do is try to keep some of the older accounts, if possible. The 2 cards I'd axe first would be the Nordstrom's and Ann Taylor, since those aren't as widespread as Best Buy and Macy's.
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