Should i pay off my credit cards and cancel them once i mget married?
Answers:
First, good for you for cleaning up your past BEFORE you get married. You will save the marriage a lot of strife over money.
Yes, pay off your high-interest cards as soon as possible. Then pay off all other unsecured, contracted loans. Then pay off all secured loans until the collateral is worth more than the loan balance. You might well raise your Fair Isaac (FICO) credit scores. See the paragraph on credit utilization, below.
Also, pay off all informal loans, and return items you've borrowed. Call in all loans from people who owe you, and get borrowed items back. A marriage takes some work, some boundaries, and some focus. The distraction of having all those loans will take away energy and fun from your marriage.
No, do not close the cc accounts. You can hurt your Fair Isaac (FICO) credit score by closing a credit card account.
15% of your FICO score is for length of credit history on open accounts, the longer, the better. The average credit user has an oldest open account that has been open for 14 years. When do you fit on this scale? These are the toughest FICO points to earn. They also score you on the average length of time all your open accounts have been open. So if you close the old account, you'll hurt your score because (1) you lose your oldest account and (2) the average age of your accounts goes down. One exception: Do not keep an account open that charges fees even if you have a zero balance: annual fee, monthly maintenance, etc. Get the fees waived or close the account. More on this, below.
Get the card with the better rewards, but only if you use the card to purchase necessities, and only if you pay all credit bills in full every month. 10% of your FICO score is for applications for new credit. You'll lose a few points temporarily for the hard inquiry into your credit history when you apply for the card, but you'll get them all back within one year, and the inquiry will fall off your report after 2 years.
30% of your score is credit utilization: how much of your credit limit is used up by your balance? On each revolving account, you need to keep your balance below 30% of your credit limit, or you will hurt your FICO score. For example, if you have a $200 credit limit, you must not have a balance higher than $60, which is 30% of $200. So the old account will have a zero balance on it, and you can't get any better than 0% utilization. They also look at total utilization: they total up all your balances, and all your credit limits. That total percentage utilization must be kept below 30% of total credit limits, or you'll hurt your FICO score. Close the old paid off account, and you'll take away $0 in total balance, but you'll take away all those dollars in credit limit, and up goes your total utilization, and maybe down goes your score. Paying down balances that are more than 30% of their limit is the easiest way to add FICO points. In the case of an installment loan, use 30% of the original loan balance, instead of a credit limit.
10% of your score is on credit mix. The good types of credit are mortgage, secured car installment loan, prime (unsecured) major credit card (MC, V, AmEx, Disc) and store cards (Macy's, Home Depot, etc.). The bad types of credit are payday loans, personal-finance loan accounts for purposes of cash advances, still-secured credit cards and overdraft loans. Ideally, you want to have at least one account for each of the good types of credit. Close the last account in one of the good types of credit, and down goes your score.
Raising your score doesn't just mean ending the bad behavior. It means building plenty of good history, too. Keep your old open cc accounts healthy by making one small, NECESSARY purchase (one purchase of groceries, gasoline or a utility bill on autocharge to the cc) each month and using auto-pay to pay it off in full the next month. No finance charges necessary to score max FICO points for the 35% of your score that is for payment history. Just purchase your way, once each billing period, to a small positive balance, and pay if off in full after the bill arrives, before the due date.
Try picking up the phone and in a pleasant, cheerful, polite tone, telling your creditor, "I'm thinking of closing my account unless you lower my rates, waive my annual fee, and improve my rewards. What can you do for me today?" If the front-line rep doesn't satisfy, ask for his/her direct supervisor. If you get a second NO, then ask to speak to the Customer Retention department. If you get a third NO, ask for the rep's supervisor. If you don't use your trump card of offering to abandon them unless they actively compete for you, they have no incentive to compete for you. It's sad that many customers don't act because of their unrealistic fear of being seen as a troublemaker by an authority figure like a credit card company: the top (unrealistic) barriers in people when phoning creditors: fear of retribution and a sense of shame and undeservedness. The big discovery awaiting such people: entire departments are hired to keep customers happy, delighted. And even if you get 4 NO's, don't close the account at any time during the conversations. Remember, you're practicing negotiation.
Do not open joint, co-signed or authorized user accounts with your fiancee/wife. Your credit score is significantly worse than hers, so if both of your names are on even one account, your poorer history will drag down her score. Keep your accounts separate from hers, and you won't affect her FICO score. But be aware that when you two move into the same home, that human being loan officers can - and often do - take into account that there's a bankruptcy (yours) in the household (same address), and that your bankruptcy can affect their decisions to grant her credit.
The advice I gave to you goes for her, too. Her 697 score, if it is a genuine FICO score, complete with the gold seal icon, is merely average (FICO average is 673 - 723, depending on the survey). Make it a team effort and you'll build a solid foundation for your marriage. Your goal, given your bankruptcy, is FICO 700. Hers, FICO 760.
I have no financial or legal interest in the companies mentioned. Best wishes.
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Ask your bankruptcy lawyer. Don't take advice from anyone unless they know your full financial history.
you should keep one of them open..it does more harm to your credit to close an account that you have been late on than it does to keep it open and have either no revolving credit or little amounts..it is a good idea to pay them off and live within your means though..good luck..took us years to figure this out.. life is better without them
pay off all credit cards asap. do not get new ones. if you pay cash for everything, then you will pay attention to the money you are spending. if you don't have the money to buy something, then you probably don't need it. follow this advice and you will be a lot happier.
You might not want to take my advice.
I hate credit cards. I believe they will eventually destroy this country by taking it over when everyone owes them more money than they earn. But here goes anyway. Pay off the darn things. Chop them up, cancel them. Then do not get anymore. A debit card, maybe.
On the chance that you, like so many others, believe that those devil cards are an absolute necessity, then pay off all of them and cancel them too. Then shop around for one that has the least possible interest and no annual payment for the honor of just carrying the thing around. Of course I would then heavily suggest that you get a big bowl and stick it in the freezer until it is partially frozen, then stick your card down into it and freeze it hard. Then leave it there. That way you'll have time to realize you don't really need whatever you're tempted to use it for before it thaws out.
Pay them off but don't cancel them. cancelling them will lower your credit score.
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