5 steps for canceling a credit card without hurting your credit score
April 21, 2010 by Todd Murray · Leave a Comment
So you want to cancel a credit card, but you’re worried that it will damage your credit score. FICO, the company that calculates your score, recently explained that the main thing to be concerned with before canceling a card is your credit utilization ratio. This is basically how much credit you’re using compared to how much credit is available to you–the higher the ratio, the more it negatively affects your credit. So if you’re looking to close an account without hurting your score, you need to have zero balances on all of the cards that you want to keep before canceling an account. That way, your credit utilization ratio doesn’t change because it’s still zero. Don’t worry about a canceled card shortening your credit history–FICO recently explained that that’s a myth. So, assuming that all of the credit cards that you want to keep have a zero balance, here are 5 steps for canceling a credit card:
- Pay the balance in full
- Because interest may have still be accumulating, call and confirm that the card has a zero balance.
- After confirming that you really have a zero balance, call and cancel the account.
- Send a letter confirming that your account is closed.
- Because it often takes awhile for the credit card company to update your credit report, wait 60 days, then use the free credit report at AnnualCreditReport.com to confirm that the account is closed.
How To Cancel A Credit Card Without Hurting Your Credit Score | The Consumerist | April 5, 2010
Credit score basics
July 31, 2009 by Todd Murray · Leave a Comment
The information in this post is courtesy of attorney Michelle Perrige Heine of Morris Law Group. Michelle has extensive experience helping people correct errors on their credit reports and improving their credit scores. Michelle can be reached at 952-832-2000.
Your credit score is meant to predict credit worthiness and is intended as a predictor of whether or not you will become 90 days late on a loan obligation. So how is your credit score calculated? Its usually made up of the following factors:
- 35% is your payment history. Make sure you pay your bills on time.
- 30% is the balances carried on your accounts as they relate to the total amount of credit available to you. The lower your balances are when compared to the total amount of credit available, the better.
- 15% is the average length of time you’ve had the credit. For this reason, its best never to close old credit cards, even if the account has a zero balance.
- 10% is the mixture of credit (ie. home loans, auto loans, etc.) you have on your credit report.
- 10% is the number of times a credit inquiry is made about you.
Credit scores are pulled for home loans, auto loans, and most other consumer installment loans. Credit scores can also affect your homeowners’ and auto insurance rates. Some employers and landlords also use credit scores in making decisions about applicants. High credit scores can save a person hundreds and even thousands in interest over the life of a loan.
Links of the week
June 15, 2009 by Todd Murray · Leave a Comment
Capital One Looks to Adapt to Credit Card Laws. How Capital One plans to reinvent itself in the wake of stronger credit card regulations.
The Debt Settlement Industry Is Busy, but It’s a Bit Nervous, Too. In a soft economy, business is booming for debt settlement firms. But with the increased business comes increased scrutiny.
State of Minnesota shuts down local collection agency. Bloomington, Minnesota debt collection agency allegedly misappropriated $125,000 in client funds.
Steering Clear of Dishonest Loan Modification Companies. Tips to identify and avoid fraudulent mortgage modification companies.
Hard Times Make Credit Score Key. With credit harder to obtain, your credit score is more important than ever.
Beware of Neighbors Home Foreclosure. How a foreclosure in your neighborhood can impact your home’s value.
Find out now if I can help you:
