Monday, November 16th, 2009
What are the effects on my credit report after closing an old credit card account?
Lyreceus asked:
This is the only credit card I’ve had in the past 24 years. It has always been paid-off on time, and my credit rating is almost as high as one can get.
This is the only credit card I’ve had in the past 24 years. It has always been paid-off on time, and my credit rating is almost as high as one can get.
The company raised my APR to 20% for no reason related to this particular account. The account currently has zero balance.
I’ve easily gotten another credit card at 9% APR and want to close the other account.
Are there any consequences for my credit rating due to my closing the first account that arbitrarily raised my APR?
Thanks for your advice.
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November 17th, 2009 at 12:35 pm
First off ignore those stupid spam answers offering help and loans.
Canceling that old account will lower your score because 35% of your score is based upon history, also, you lower your available credit which changes your debt utilization (how much you owe compared to your total credit limit).
Example: 2 cards = total credit of $10,000 you owe $3.000 on one card for total 30% debt utilization which is good (lower even better). Now you close one of those cards and still owe $3,000. You now have available credit of $5,000 and your ratio is now 60%, way too high and this will lower your score also.
So closing it would not be a good idea, just keep it open and do not use it and save on the APR.
Hope this helps answer your question.