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
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.
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.
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!
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.
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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