by Claire
As much as I’d like to say we have the debt down to $85K, those numbers you see are not accurate. I’m having some technical difficulties with the blog as I eliminated the 4 debts the consolidation loan is paying off but now cannot seem to add the $11,000 loan to the balance. Bear with me but I just wanted to write a quick note so just in case anyone notices…they don’t think I’m delusional or robbing banks.
This is so exciting! We are even more motivated and looking forward to finding additional ways to cut spending! I did more minor couponing last night getting some staples and my beloved Special K Cereal Bars (if these are bad for me, please don’t say so… 🙂 ) and our grocery bill was only $40 for the week. We have some schedule issues that have kids out of the house at unusual times but instead of buying like we normally do, we thought ahead and made the money saving adjustments.
Quick question—do I close all of the credit cards I paid off with this loan? I can’t figure out from my own quick googling if that is good or bad for my credit score so I look to you for advice.
Born and raised in Texas. I’ve at least driven through every state in the US courtesy of a roadtrip loving Dad.
I’m single with two children and a good parenting relationship with their father.
I am a “life is just half full of funny” kinda gal. Humor is my saving grace and I am thankful for it every single day. I have a strong Catholic faith and am thankful for that foundation.
I read a lot for a living but still enjoy a good book. I love biographies but in recent years have found the need for fun fictional books–sadly, for a long time I just didn’t enjoy fiction!
I love live theatre of any kind–from local productions to Broadway.
I love to scrapbook and pride myself in my kids’ albums.
I love being a mom but also love my career. I’m blessed to have found a balance allowing me to be at everything my kids need and want me to be at–while also having a career.
Favorite Quotes: Well behaved women rarely make history.
Behold the turtle. He makes progress only when he sticks his neck out. -James Bryant Conant
All fixed now! At least the list is shorter I guess…and soon the numbers will be smaller.
I hope this is not too personal – how did you qualify for a consolidation loan with all of your debt? I’ve hesitated to even apply fearing rejection – we have no equity in our house after our town reassessed (translation: significantly lowered) the value of our home.
Not too personal at all Pamela. I assume both my excellent payment record through the many, many years (never late on any payments) AND my individual income now being at its highest (I’m 40 and am finally being paid an appropriate salary for my education and experience), adding my husband’s salary into the equation…plus my very long history with this particular lending institution all positioned us well for this loan. I was also able to explain to the bank representative that we are already paying out more than the minimum on the loan they were considering giving us.
Closing the credit cards will actually lower your credit score — definitely close them if any of them have yearly fees. Also close them if you aren’t confident that you would use them in non emergency situations. If they do not have a yearly fee and you feel confident that you won’t use them, it is better to keep them open.
If you just want to close some, consider leaving open the one that has the longest history.
I agree with this. Do cut up the cards once they are paid off. I fell Into the trap of paying off my card, then using it for a big purchase! If it doesn’t have a fee just let the account close itself from “non-use”(about 3 years).
We got rid of all the cards – Lets face it, credit score is the last thing you need to be worried about.
It’s the supposed good credit score that causes all of the problems.
I’m actually old enough to remember when using plastic was frowned upon – and not some sort of status symbol.
I would pick one or two cards that you intend to keep open long term and then plan to close the others. Like Jeffrey said, keep your longest history or a card that you just like to have be it for the rewards, because you like the way the account page is setup, whichever. In the long run, it’s probably best to only have a couple cards.
It’s bad for your credit score, but who needs a credit score when you already have a house and don’t plan on opening any more lines of credit?
🙂
If that’s a bit too much, then just figure out which ones have annual maintenance fees and close those..
Unfortunately, your credit score is used for more than getting new loans :/ Certain prospective employers will pull your credit score during the application process, and your insurance rates an be affected by your credit score.
It’s all a little creepy, IMO.
at least cut them up. the temptation to use them will return, i promise.
and I agree with Tiffany. A credit score is just an indicator of how good you are at being in debt. you don’t need a credit score if you don’t need credit!
Lightheartedness aside, I encourage you to ask yourself if a high credit score is really important to you. And if so, why. We often get caught up in chasing this score that really means nothing except how good of a target we are. If you ask the tough question, you may realize that chasing the score seems stupid to you once you think about it.
i stopped chasing my credit score number 2 years ago and it was liberating.
Tiffany…Adam…Janelle…I don’t have any of the smaller cards anymore–destroyed long ago. I have the larger ones but don’t carry them. I know that I’m at risk for using credit and always will be. To directly answer your question Janelle–the goal is to never go into credit card debt again. I just do not have the same heartburn about car payments and mortgages. That may anger some readers but that’s where I’m at right now. So, I DO plan on having a mortgage that we will pay off before retirement and hopefully we can avoid car loans altogether. Part of this is I haven’t disclosed our housing situation–yes, my husband owns a home…that he rents out…and we live in one that we rent. Let me allow you a moment to absorb that! You might see why I haven’t “gone there” yet…but apparently I am now! My husband’s house (pre-marriage) was not big enough for 6 people and created an absurd commute for both of us (AND the move got 2 of our 4 kids OUT of private school and into much better public schools saving us LOADS of money. The other two (my stepsons) are still in private school but that is due to issues b/w my husband and his ex-wife. I know some readers would say that we should have bunked up kids and just made do, but the kids faced enough challenges without their living arrangements being made very uncomfortable. So…we found renters for his house (very reliable and known to us) and then decided to rent a big house to house us for the short term (i.e., while we still have all of the kids living at home)…THEN (are you still with me?!) we plan on buying a modest home to get us through the 2 youngest kids being with us and envision that being the home we stay in! We do not want a big house when the kids are gone!!!!! Even in the “big” house (4 bdrm) we have kids bunked up and that’s okay…but with 3 boys and 1 girl we couldn’t do 2 kids in each room. And yes, we have full custody of everyone. SO…..that’s the long version. The short version is I need to be somewhat concerned with a credit score at this point in life, don’t I? Assuming of course that we take out a mortgage. Who knows? If we gain enough momentum maybe we’ll plunk down $175K cash for a house when the time comes. Just to give you a timetable–the kids that are still going to be living at home next year will enter 9th, 7th and 3rd grades. Oh and NONE of the cards have annual fees. Isn’t that funny? I can be so oblivious to interest rates but I’ll be dam*ed if I’m paying an annual fee! Ironic! Okay I think I may have to turn this into a post so I am sure to share with all! It’s just so $&%!$^ CRAZY and I KNOW it is crazy and that’s why I hestitate to share! Blah!
Aaah…. The challenges of a blended family 😉 Your situation sounds goofy, but it makes sense to me.
Your house situation sounds completely rational to me.
CLOSE the cards! Who gives a rip about your credit score – CLOSE THEM! The goal is being debt free, which will raise your credit score like crazy. Keeping too many revolving accounts, but more importantly, the TEMPTATION to spend on them is every bit of reason why you should close them.
You questioning closing them brings up the bigger picture: Is your goal mearly to pay off ‘these’ debts or to never, ever go into debt again? If you knew you wanted to live a life free of debt, free of payments and free from ever tempting yourself, you would know you’d want them closed!
Close em!
Not everyone paying off debt needs to close their cards. When I was paying off my credit cards I never closed them until I had finished paying them off. If Claire doesn’t carry them with her, then she probably won’t use them. She may even have them stuffed in a drawer somewhere so she doesn’t even see them.
I don’t think we know Claire well enough to know if she’ll give in to temptation or not. Some people are strong enough that they can avoid new debt. It’s really up to her in the end whether to close them.
Light bulb just went off (on?). You’ve mentioned your squeaky clean payment history several times, and I also have a very good history of paying on time.
I realize this can be a source of personal pride (and paying as agreed certainly should be), and a high credit score is an indicator of how responsible you’ve been and how hard you’ve worked to make every payment on time, so the thought of intentionally taking a step that might harm your score can be a pretty tough pill to swallow. So I can totally see why you’d question what’s the best thing to do. I still say close the accounts and don’t worry about the score.
I am 29 and have been borrowing money since I was 15. My dad even gave me an emergency card when I was younger and thankfully paid the payments on time, so I had a 771 score or something like that in my early 20s. When I bought my first car off a dealer’s lot, the guy said he’d never seen someone my age with a score like that.
Then my renters fell through on my rental house, which I am only renting because I’m underwater too far to sell it, and with the first missed payment, my score tanked to the C, C- range. After 15 years of spotless payments.
At the end of the day I had to console myself and remind myself I am still a responsible guy who pays back what he owes and my lifetime of history proves it, even though FICO shows me as a significant credit risk (even though I’m now caught up on the house).
So I applaud you for your responsible history, but you can’t put stock in what that number says about you. so for that reason, I say close the accounts and forget about the score.
Adam! Here we were typing away at the same time! Does my crazy living situation shed some light on this?!
There are others besides lenders who care about your credit score: employers, landlords and insurance companies (Smart Money Article).
It’s something else to consider when thinking about closing cards since closing them will affect your credit score.
Thanks for that reminder Tricia–that’s the last thing we need is insurance rates going up!
Hah! I knew I should have read the rest of the comments before I ended up saying what Tricia said!
Great minds think alike 😉
close the cards! even if you want to aim for high credit scores you have too many revolving accounts, the people with the best scores have 2-5 revolving accounts. closing the accounts may hurt your credit slightly in the short term but that is only because closing them will mess with your debt to credit ratio, but in the long term closing them is probably the best way to go. on a side note, you can get a mortgage w/o a credit score, I work in the industry and have seen it done many times. and having a lot of open accounts even with zero balances counts against you with mortgages b/c underwriters will see it as a potential risk (people tend to charge up their cards with things for their new house after they get into them)
Don’t close! Your credit score will drop dramatically because of “history” and “available credit”. Cut up, freeze, burn, whatever, but don’t close. The score drop will be notated by other lenders who could raise your interest rate. It is against the credit rules to raise interest based on other cards factor, but banks are underhanded and out for themselves so they will use another “excuse”.
+++++++ to Angela here. It’s a great feeling to close cards, but wait until the very end and do it all at once for the reason that Angela states here. Don’t count your chickens until the eggs hatch, and don’t do anything to jeopardize the eggs!
Excellent point! Angela’s comment helped us decide that the Discover card with a $10,000 limit will stay open but unused. We are closing a retail card with a $2,000 limit, a Wells Fargo “cash on demand” thing that was at $1,000 with a $3,000 limit and a Household Bank card with only a $1,000 limit. I awoke today to emails from Household already back to “courting” me.
Definitely close the store accounts.
I think you need to talk to a professional (ie trusted broker, etc) about how many to close. I think the sheer number of cards you have has a larger negative impact than closing them and having a reasonable number of cards. It may have a short term negative effect but a much longer positive affect. Having a large amount of credit available can ding you as well. I think I would leave this one up to the experts 🙂
Another thing to find out would be how quickly your credit score can recover after the initial dip. I wouldn’t be surprised if your score can drop quickly but take longer to go up if all you do is close a bunch of credit cards but maintain your payments… I just assume in this case the system is stacked against you 😛
But, if your score would recover within a matter of months, then itm ight not be that bad… But you may want to do so when the insurance companies are reviewing your policy renewals.
I would close all but two. While it is true that your score will decrease, it may be currently affected by all of the open revolving accounts you have. My score was not heavily affected when i closed six credit cards and one loan. In fact, after my final loan payment my score jumped several points since i had fewer accounts open.
I too was worried about my credit score when getting out of debt, but being debt free is worth more than my credit score (720).
Good luck!
Agreed with scarr; close all but 1 or 2 ones with big limits, and put those on ice (literally). You’ll make up for it by lowering your “debt availability used” or whatever it’s called by paying off debt. Too much temptation. No one needs 6 cards sitting around.
I think you should figure out what the end (goal)should look like and then close all but one or two cards.
I would close the cards, but not all at once, to avoid a huge hit to your credit score.
I’d stagger the closures, kind of like downsizing, a little bit every few months or so. I’d also keep 1 card with a long history on it.
As your debt goes down, the amount of available credit increases, and then you can lower the amount of credit cards you have. 🙂
Close all the cards. ASAP. Here’s why:
You have plenty of other debt, and the payments on that will maintain your score. And research is inconclusive as to whether closing credit cards affects your score anyway. And as you get more into paying off debt, hopefully you’ll care less about your credit score anyway. Plan not to borrow money rather than planning around maintaining your score, which requires always having debt.
It’s safer to close them. Fewer chances of identity theft and less temptation to spend on them again.
Your life is simpler and cleaner with the cards closed. Why bother always having to change your contact info when you move and otherwise think about the cards hanging out there?
Close the cards! As others have said, if your end goal is to be debt-free you don’t need to get hung up right now on what your score is. You are realistically a few years off from taking out a mortgage and your score will recover by then from closing the accounts plus paying down the existing accounts.
And not to be a downer, but with your consumer debt the way it is right now, it might prove to be very difficult to be approved for a mortgage with the new underwriting even though your income is high. Some good friends of ours wanted a new patio with outdoor kitchen etc. and were denied a 35K home improvement loan even though they had no consumer debt and their combined incomes are 200K+. I know that’s a little different than being approved for a mortgage, but it’s just an example of how difficult it’s becoming to get financing these days.
Thank you for all of the great advice here. We are going to close 3 of the 4 cards–and then revisit on that 4th card in a few months. The 3 we are closing are retail and then just lenders that are worse than your average bear (read: predatorial). As to using them again, I will not lose sight of my reality (I’m a debt addict and cannot be too careful) and have a whole new accountability in my relationship that I’ve never had before. Not only do I want to avoid taking myself to that place…I certainly do not want to take my husband there with me. Thanks again everyone.
As someone who does not care about credit rating, this has been an amusing thread to read. Close! Don’t Close!
Great job Claire, making up your mind for yourself. And great job making those first phone calls to try and negotiate lower rates and then finding an alternative. In my line of work we call those DPC (dreaded phone calls) so I appreciate how hard it was to pick up the phone. Hopefully, this positive experience will have you advocating for yourself more in the future.
We have a large family with kids going out at all times in the morning. We pack lunches the night before. Each kid has a dish night and as part of that they pack lunches for everyone. If you “forget” to pack lunches then you have to do a week of dishes and lunches to help you remember. If you pack a crap lunch, same thing. School lunches are only bought with your own money and cash is hard to come by here.
Congrats on sticking it to Discover Card. They deserve it.
Close at least 2-3 to avoid temptation, good psychologically too.
At this point your credit score is the least of your worries. Retail credit cards–if by this you mean store cards, are bad for the overall credit score picture and they tend to have very high interest.
I don’t know what our score was when we were ankle deep in debt but 2 years after clearing up our act we are now at 807 with only two major credit cards with very low interest rates and we almost always clear them each month.
We are still tempted to use them with a monthly runover owing but so far have smacked our hands away from doing this. I guess it is like giving u smoking–the urge is still there.
Don’t be too casual about getting a mortgage whenever you want to. I don’t think your arrangements are goofy though. They make very good dense. (Been there, done that–my second marriage I had my own two kids and my new husband’s much younger brother (The parents could not cope with him–don’t know why, he was a sweetheart but they were certainly flakes!)
When we refinanced our VA mortgage for a lower rate (now 3.75%) year ago our attorney was amazed that we would get a new fixed loan, even with our great credit score, as = very rare; in our state anyway.
When you pay off a debt, leave it on the list with a zero balance. As you pay the debts off, the zero balances will be there to motivate you. Kind of like winning a gunfight, blowing the smoke off the end of the barrel, and putting another notch in your belt.
Agree!
Thanks Chantal. I need to keep my perspective in check!