Closing down accounts

Submitted by Anonymous (not verified) on Mon, 08/30/2010 - 06:12
Forums
Credit repair

Hi,

I currently have one checking and savings account with a bank. I have had it for about 3 years. I opened this account because it offers better car-loan interest deals if I use auto-pay from a their bank account. I also have another credit card with another bank and I opened it because it's cheaper to pay car insurances with it.

Since then I have paid off my car loan and I plan to switch my auto-insurance company, and both the bank account(s) and CC have annual fees associated with them. Therefore, I would like to close them and look for better options. (I will pay off all balances before I close it). I had applied for a card, and have received a better offer.

Now, my questions is whether there is any adverse effect in closing these accounts in regards to my credit score.

Please let me know.

Aaron

Hi Frey,

Closing down your accounts can hurt your score. As you close down accounts the credit limit lowers, and as a result the credit utilization ratio goes up. If the credit utilization ratio is high your credit is hurt.

Moreover, when you close accounts the credit history is lost after sometime. thus, if you have a good credit history, I don't think you should close down your accounts.

Thanks,

Aaron

Mon, 08/30/2010 - 11:58 Permalink
fireyone

There is suppose to be a law that will go into effect concerning this very topic. I believe it mainly applies to credit cards. From what I have heard on the subject is if you do not use an account or have one paid they can not automatically close it making your score go down. Now if you are paying fees and it may be worth your while.

I have car insurance and payments that come directly from my account and the with my car insurance they actually give me a discount if I use this method.
One other thing...Do you have a few older lines of credit? If so those are the ones that matter even more. If you really want to close the other accounts and have some even older ones through other places then you should still be in good shape.

Mon, 08/30/2010 - 13:02 Permalink
Aaron

Hi fireyone,

Can you please provide information on the news or article from where you got to know about this law?

Thanks,

Aaron

Tue, 08/31/2010 - 10:09 Permalink
tracy (not verified)

You can take advice from news paper and online..

Tue, 08/31/2010 - 11:19 Permalink
Aaron

Hi tracy,

Can I know what kind of advice you are talking about?

Thanks,

Aaron

Wed, 09/01/2010 - 11:40 Permalink