Clean up Credit Report

closing those old or unused credit card accounts

Clean up credit report. To close or not to close, those old or unused accounts that is. Tossing out the old certainly can clean up a credit report from a tidying point of view.

Though, how many times have you taken some sort of action thinking the end result would make that score go up. Later only to find that it was the wrong course of action.

Clean up credit report pointers

On the pro side of this issue it is generally thought to help you

  • avoid unnecessary fees

    any accounts that may have an annual fee to maintain or fees assessed for inactivity

  • guard against identity theft

    unwatched accounts are a top pick for identity thieves

  • accounts with high interest rates are ones that many are advised to close if not in use

  • many clean up credit report when their debt load is too high and want to reduce temptation

  • the quest to simplify life is another good motivation for cutting down the amount of credit cards in your possession.

The risks of cleaning up a credit report

  • Randomly closing accounts that you don't use

is not always a good idea especially if your debt load is high. You may want to save these accounts to keep your overall credit limits high. Any account closing will lower that overall limit and therefore raise your utilization ratio that lenders use to determine your credit score.

  • Closing your oldest accounts

Look for the dates when the account was first opened. You don't want to close your oldest account. Length of credit history has impact on credit lending decisions and can help if you find yourself needing to rebuild credit from any unforeseen events that can destroy your credit.

  • Consolidating your debt on one account

When you do have a load of debt that you are trying to manage, many opt to consolidate balances to one card or account and then consider closing the accounts they transferred from.

Though this will help with working your debt down and keep you from adding more, it will also have a negative effect on your credit. That utilization ratio is assessed on each account, therefore if all your debt ends up on one account it can still have a negative effect.

And again the account closure will change the ratio. So step carefully!

  • Closing many accounts all at once

Clearing out the schedule to clean up credit report probably isn't a good idea either. Gradually paying down and closing accounts may be the best plan if you are unsure about the impact on your credit score.

It usually takes one to two months for changes to appear on your credit report. Spacing the closures over time will reduce the chance of attracting negative suspicion from potential creditors and current creditors. Some will see the behavior and may try to beat you to the closing. Closure from the creditor may imply that at some point you were looking risky.

Other considerations

Some times when managing debt, the more important decision is to lessen that load and simplify the situation.  Putting that debt all into one place can be a more structured way to handle this problem. If you have a plan to aggressively pay debt down after consolidating, the negative impact can be lightened.

Another option in handling out of control debt would be to close the account that has the debt on it if you don't think you need the card later. Concentrate on paying off the balance. Watch for any hidden fees though. As your debt load goes down you will have the ability to select other accounts to close that clutter up your credit report.

Start the clean up credit report process by checking your credit reports online to see the status of your accounts. Look for late payments, high balances and signs of identity theft. In your credit report you will be provided with contact information for each of your creditors. Helpful if you find anything amiss and when you have targeted those accounts you no longer need open.

Are any of these accounts listed as closed by the creditor? Many times if an account is laying there dormant a creditor will close it. Others though will leave it hoping you will come back to use it.

These accounts are usually those that were opened to finance some particular item (furniture, mattresses, computers). If the date of these are older, there are no annual fees, and you are not tempted to use them saving these helps to keep your history long and well established.

You can use that contact information found on your credit report to contact the creditor of the accounts you are looking to close. If the telephone number is not listed the credit bureau that provided the information (according to FCRA) can give it to you upon request.

The safest and most secure way to close an account is to send a certified letter to the customer service department of the credit company. You should receive an account closing confirmation letter in 10 days.

Once you do close those old accounts to clean up a credit report, don't forget to check your credit reports later for the updates and error corrections.

Wait at least 30 days for the creditor to report the closed account and the credit reporting agencies to update your records. While the accounts and their payment histories will stay on your report for 7 or more years, they should be marked as "closed by the consumer."

Remember, in the clean up credit report process,to keep at least four to six credit accounts open and fairly active. This will keep your credit history looking healthy. Signs of active and responsible credit use are viewed positively by creditors.

Continue those healthy credit practices by designating one card for regular use of everyday purchases that are paid in-full each month. Reserve the other cards for emergencies only so that you are not tempted to overspend.

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