Another one of those credit questions...?

Question

I am in the process of repairing my credit. I have paid off 5 credit cards. Is it a good idea to close these accounts or keep them open? Also, I will have most of my collections dropping off my credit report in the next couple of months. How will this improve my score?

Answer 1

From what I've seen, you need to have some good payment history.  Just paying them off isn't enough.

Keep them open - use one every now and then and PAY IT ON TIME

That's what usually breaks a credit score in half

Answer 2

Well your score will lower by closing these accounts, but eventually it will go back up. It is good that you have the three open active accounts. With those three opened and used responsibly your score will recover. One tip don't use more than 40% of your credit lines. Maxing out your credit will slow the rate at which your credit will rise, even if you pay on time.

http://www.creditwish.com

Answer 3

All you need is 2 active credit cards. Keep the 2 older open and close the others.

Answer 4

it should go up. -- with that said --dropping off. Are they still unpaid? If so, they will probably sell to another collection company so the reporting can go on

Answer 5

A large part of your credit score is based on the ratio of credit card debt to available limit.  If you close credit card accounts, you lower your overall available limit.  This will increase your debt percentage if you are carrying balances on other credit cards.  Carrying balances of more than 30% hurts your score.  Paying off credit cards is the fastest way to boost your score.

If you still have balances on other credit cards, do not close any accounts until you have paid ALL the credit card balances off.  Then keep the two oldest major credit cards that do not have annual fees -- you want to keep the longest history.  Only keep store and gas charge cards if you have some special purpose and actually use them.  

Close the rest via mail and request written confirmation that the account is closed and 0 balance.  You want to keep these letters with your important financial papers.

Derogatory items aging off you credit file won't increase your score as much as you think.  The older the item the less impact on your score.  By the time derogatory items get to the 7 year mark, they have very little affect on your score.

Answer 6

Close out the accounts that you are not using. Keep a car payment & 2 credit cards open. Your scores should improve over the next 6 months.

Answer 7

Keep them open! Do NOT close the credit cards unless you don't trust yourself.

Ideally, start spending small sums on each of the credit cards and paying them off in full. Your credit score will go up a little every quarter or so. They _do_ want to see responsible handling of credit, so it's more useful to have several cards and use them responsibly even though your total limit may be high!

Congratulations on getting yourself out of that debt sinkhole!

Cheers,

LBF