closing credit cards due to lender raising interest rates

cLOSED ACCOUNT STAYS ON YOUR FILE FOR APPROX. 10 YEARS, CONTRIBUTING TO THE LENGTH OF YOUR CREDIT HISTORY AND THE AVER. AGE OF YOUR FILE. WHEN TL FALLS OFF YOUR REPORT THEN YOU TAKE A HIT IN SCORE.

Hi lexusstier
Closing your old accounts would lower your credit score as per the FICO credit scoring model where about 15% of the total score is devoted to the length of your credit history. If you have old credit accounts for which you make regular monthly payments, it is always advisable not to close down the account by paying a lump sum amount. After the payment to the credit account is paid in full, the account will automatically close down. However, in case of credit card accounts, I would always suggest not to close down old accounts operative.

Except bankruptcy listing, all negative listing stays on your report for seven years after which it automatically gets removed from the credit report. Bankruptcy may stay in the credit report for 10 years. As far as I know, all open accounts gets listed in your credit report and is either marked as paid or late. Once you pay off the debt in full, the account no longer remains in the credit report but the number of late payments are highlighted in the payment history section. These late payments listing may lower your credit score.

If you have accounts the same age or older than the card you want to cancel your credit history shouldnt be effected.

However, you will want to make sure closing the account wont throw off your debt.income ratio

either way if the intrest is causing debt you can't afford close the account and either pay it or transfer the balance to a lower intrest card. It will be better for your CS than a charge off

Please CMBV I just asked this question on anpother post. How does it effect debt/income ratio? I have accounts that I am hoping to close once I get some money. I am wary about leaving them open in case another bad time hits. It is too easy to use them if they are open.

Hi Fireyone
The lower is your debt to income ratio, the stable you are in the eyes of the creditor. Debt to income ratio means the proportion of your income you spend to pay off your existing debt. For example, if you have an income of $3000 of which you need to spend $100 for repaying credit card debt and $200 for auto payments, your debt ratio or the debt to income ratio would be 10% (300/3000 *100%)

That clarifies it for me. Thanks for explaining how this works.

great way to break it all down into a nice easy way to understand it, thanks for the great explaination.

This means that more is out debt ratio, the less we are creditworthy in the eyes of the creditor, because they will find it risky to offer credit to borrowers already having a number of open credit accounts. Moreover, our credit score will also decrease because amounts owed contributes about 30% in our credit score according to FICO credit scoring model.

Thank you justing for the in depth explaination of the credit to debt ratio.

Some people do not relize that there actually is a debt to income ratio. When I first heard this at our bank I was like "what". Does make sense to have it though.

Since credit cards are mostly unsecured, the companies charge very high rates of interest. You can only get low interest rates on balance transfer credit cards. The annual interest rates on these cards starts from very low interest rates somewhere around 8.5%. Some of these cards include Citi diamond card, Citi Platinum Selct card, Bank of America Visa cards to name a few. However, the low interest rates on these cards are mostly valid for a period of 12 months.

Thats a good way to do it. Why do credit card companies offer balance transfers? I have seen them as low as 0% for 12 months.

What I think is that, most of the credit card companies offer balance transfer card at low rates only to build up their customer base. However, these low interest rates are only introductory and are valid for a period of six months to one year. These cards are also have no annual charges.

You should not transfer over high amounts unless you can afford to pay them off before the grace period or the six month period is up.

Thats what I am trying to figure out and want to make a new post on so I can get everyones advice. I am debating on rolling a higher debt that will lose its zero percent interest here shortly or just go to the bank and get a loan.

I would go back in to the bank and get the loan and pay it off to keep the good rate on your card.

That would be the smart thing to do, but hopefully you will hear something on your money before you have to do anything like that.

just hope you get an answer soon

Fireyone, things will be better soon, hopefully you will hear something real soon and you can get all this off your shoulders and get rid of some of this stress.

I am counting down the days. The expect first response in 45-60 days but that will put me in late October and it will be too close. I am thinking I will go to the bank. It rained here all day friday and I was home alone so I sat down with the trusty pen and paper and tried to figure some things out. It didn't look to good and that was without including emergencies or breakdowns, repairs, you name it.
So I am thinking a payment on that amount would probaly be roughly $150-200. I can not fold this in anywhere with taxes, fuel, holiday pays, holidays so here is what I came up with.
the loan processing fee would be abput $100 or so. Thats not too bad so if I took the loan out for $6000 and the totla on the cards is $5700..that would total $5800 with fees. I already pay $50 monthly so if I continue to do that and only use $100 of the extra loan money each month that would carry me for a couple more months.
Surely sonce I am at no fault with extensive injuries it shouldn't drag out much longer than end of year. Tell me what you think of my idea.

Depends on how long you had the card. the older the account and if you made your payments on time (account was always in good standing) then it could have quite an effect.

Hi Kathy
Since you have not used this credit card for long and for that very reason the card is being closed, it will not affect your credit score much because the card do not have a good credit history which plays a major role in your credit score. There may be a small drop in your credit score because of the "length of the credit history" factor. The only thing you need to do is to ask the bureaus to change the listing to "closed by grantor" if it is listed as "closed by customer" in your credit report.

They can do this at any time. I just posted a topic on this today. A lot of credit card companies are doing this now. Some see their rates go up trple what they were before. My advice is to pay it off as soon as possible or go to the bank and take out a small personal loan. It will have a lot lower interest rate and have one that will not change. Since it is a closed account you can not roll it over to another card or I would have suggested that.

I know someone is has 'ok' credit. They had a CC ( don't know which one it was..) and the % rate changed, to a higher % rate. She 'rolled it over' to another CC she had. The question I have is ..if she has 'ok' credit, will this 'transaction' look 'bad' on her credit? Wouldn't this 'transaction' tell lenders that she couldn't afford the FIRST CC when she transfered her balance to another?

No, if you transfer the balance from the existing credit card to the new balance transfer credit card, it will not effect your credit score because you are not defaulting yourself, instead you are paying it off on time. Now if you close the first credit card after transferring all the outstanding debt to the new credit card, it will lower your credit score because all your payment history on your old card would be lost. Since the payment history constitutes about 35% in your credit score, it would affect your score.

Hi Kathy
If the card that is going to be closed by your credit card grantor has a good credit history and is very old, it will affect your credit score. This is because 35% of the credit score depends on your credit history and 15% of your credit score depends on the length of the credit history. However, if the card is closed by grantor, you should ask the credit bureaus to change the status of the listing to "closed by grantor" if it is listed as "closed by customer" in your report.

Is there a certain amount of time that goes by that a current payment status will start reflecting positively in your numbers?

Also..here's a question. If you have an 'un-paid' balance on a CC, and you KNOW it's on your CR, if you pay it off, will this make your CR look a bit better? The % rate, on a CC just got too much for me. I still get letters for the balance due. I mean...........it's been a while since I paid on it. But..what I'm asking is I know that debt probably lowered my score. But......the older the debt is, will my score go up? I hope you understand what I mean, cuz I'm not sure if I'm asking this right.

GN...not postive about this but it usuallt takes a few payments.Is your fashion bug card registering yet? If not give it a couple months due to back billing and see if it shows up then.
SD...I read that here somewhere that the older the debt is the less damage it does to your report. Also paying off a debt once it reaches your report doesn't do much good if any at all. Thats why I had told you in another post that if this debt is past SOL...keep the money in your pocket and wait for it to fall off.