New #breakthrough #tip: A customer asked the following question to a Real Estate Partner: I am thinking of closing an old #credit #card that I never use will this hurt my credit? I am #planning on #buying a #property and don’t want my #score to drop. Our Real Estate Partner answered: This is a good question, and the answer is yes, this could damage your credit score. Since this is a credit card and falls into the #revolving credit category, when it closes you will lose the utilization allowance that the limit on the card gives you. If the balance-to-limit #ratio on your #aggregate revolving accounts is high, it will drop scores. Here is a good example of a consumer who had 3 credit cards inflatable water slides: •Card 1: limit of $10,000; balance of $5,000 •Card 2: limit of $5,000; balance of $5,000 •Card 3: limit of $5,000; no balance Once you close Card 3, which has a $5,000 limit, the aggregate balance-to-limit ratio changes from 50% to almost 70%. This could drop scores 20, 40, or more points, depending on the rest of your credit and your original credit score. Having higher aggregate limits gives consumers more leeway to increase balances without hurting credit. The lower your balances are on revolving credit, the better it is for Fico credit scores. Feel free to contact us anytime. We gladly welcome your questions.
Posted on: Mon, 22 Dec 2014 11:30:00 +0000
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