Does anyone know of the ‘rule of thumb’ when it comes to closing accounts that appear on the credit report, with zero balances? We’ve paid off a few things and they are at 0.00 but I’m not sure if I should close them to reduce the number of accounts OR leave them open? Not sure which is better.
You should keep them open; your credit history (length you had a credit account open) is a very important part of your credit score. Leave them open as they actually help your credit score by having “proof” of your credit history. The older the credit line, the more credible you look to potential lenders in the future.
I’m going to add though, in many cases, if you don’t want to use the account again, I do close them. My fella has all these different accounts open and owes on ALL of them. When he wanted to get a loan to pay all those off, and go to a smaller payment with 1 check a month, he was denied because he ‘has too much credit’. He has no way out.
I did close a lot of my accounts, except for a Target card and JCPenny’s.
All others are gone and some are at level payments every month. I can add more if I want to, but I really hope to get out from all the others before doing anything else.
Paying the old dogs off will help improve your credit report. Nothing will show as currently behind/late/delinquent. Even if it currently is late, bringing it up to PAID is improvement. The history will not change, but to the loan issuers, it will show that ALL of your available funds are their for paying the mortgage. And you will likely be approved for installment loan online. I know, it sounds strange, but it is important that you have everything “sparkling clean” on your credit report. Everything up to date, an explanation for all of the bad marks, etc.
We had to verify that a $32 medical bill had been paid by our insurance company in the last couple of days before our mortgage went through. It was stupid!!!! However, the insurance company faxed over a copy of the payment being made and it was removed from our credit report. Problem solved.
Sounds like pretty good advise to me! It is amazing how much impact little changes can make to a credit score.
Without know all of the details, it would seem that by paying off the derogatory accounts, and keeping everything else current, you might see a lift in your score.
If you and your husband are serious about financing a home, your first steps should be 1) Clean up and clear up your credit history, 2) Figure out how much of a monthly payment that you feel you can afford- comfortably, and 3) Get your down payment and closing costs resources together. Must legitimate and reasonable credit offers will come from lenders looking for between 3% and 5% of the purchase price as a down payment.