Questions with my credit report.

[Moab]

Couple of questions since I just got my credit report.

Should I close out accounts I know I will never use and forgot I had? I have a Sony account from Crutchfield that I opened a couple years ago to buy a subwoofer and a Suzuki card I opened when I bought a motorcycle about 3 years ago. Haven?t used either since I first opened them. Would it hurt to close them? In total I have my bank credit card, my Chase Mastercard which I use all the time, a department store card which I use, an AMEX Blue I just keep open because it?s old and free, and now the Sony and Suzuki that I just remembered about.

Second, I noticed that Verizon is showing up on my credit report. It doesn?t have much information with it and it?s just listed as ?Utility?. Should this be there?

 

[ValkyrieofHouston]

I would close out the accounts you don't use but keep some accounts open so that you can keep your credit score still strong. Sometimes closing accounts out can actually hurt your credit score believe or not. Just my 02.

 

[axnff]

Definitely keep your oldest credit account open if at all possible; also your biggest. And don't close enough accounts to drive your credit utilization too close to 50% - that's the line where your credit hits a death spiral. If you can close those accounts and follow these rules, you will probably not hurt yourself. However, it will only help if you're looking to establish a new credit account, and maybe not even then.

As to Verizon, do you have a Verizon phone? If you don't then it's probably a problem. If you do, then pay it on time and be glad that someone is reporting positive information to the credit bureau on your behalf....

 

[Moab]

1) "credit utilization too close to 50%" -- whats that mean?

2) Yeah, my home phone is Verizon. I didn't realize utility things show up on your report.

 

[jlbenedict]

The Suzuki account is something I would keep. I'm sure purchasing a motorcycle was a large purchase. If its paid in full then that would make your credit utilized to max credit ratio look alot better.

 

[mcvickj]

If you have $20,000 line of total credit but only in debt $5,000. If you shut down some of those cards your max is doing to decrease. ie. Now you only have $10,000 max but you still have the $5,000.

I believe that is what that means.

 

[QED]

I'm guessing that the Sony account is a revolving line of credit. Was the Suzuki loan a closed-end loan (i.e. fixed payments amounts over a preset term), or was it also a line of credit?

There really is no such thing as "closing" a closed-end loan that's already paid off.

If both of revolving lines, then there are several factors that influence how closing them might affect your score.

The primary factor is the effect on your revolving credit utilization, as others have said. To find out what your exising utilization is, simply add up all of the outstanding balances on your line of credit accounts only (NOT any closed-end loans such as your auto loan, mortgage, etc). Then divide that by sumof the credit limits on these accounts.

If this utilization is high, your credit score will be dinged.

Now the problem with closing unused credit lines is that they keep your utilization percentage low. If you close them, you've effectively decreased the sum of your credit limits-- which will mean you will appear to have a higher utilization percentage.

The second factor is the effect on your credit report "aging". The higher the average age of your open revolving accounts, the better your score will be. People who have had the same 5 cards for 20 years tend to be more trustworthy with their payments than people whose oldest account is just a few years old and open a new account each year.

Take a look at all of your revolving accounts, find out how many months they have been open, and average them. If the accounts you want to close are older than the average, I wouldn't close them-- in fact, I would use them occasionally to make sure the aren't closed by the creditor.