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HomeBlog BlogShould You Close A Credit Line You’ve Paid Off?
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Should You Close A Credit Line You’ve Paid Off?

February 7, 2013 by National Debt Relief

Let’s suppose you bought a $600 sofa using one of those “no interest charges if paid off within 12 months” lines of credit. You pay off the balance within the 12 months so the question becomes, should you close that credit line.thinking woman with credit card and laptop

If you don’t plan on using the account

In most cases, once you pay off the balance, the account will automatically close. However, to be on the safe side, you might want to make sure it has been closed. If you’re not carrying balances on any other credit cards then closing the account should not hurt your FICO score.

About that FICO score

Your FICO score is critical because it basically rules your credit life. If you have a good FICO score of 750 or higher, you should be able to get any kind of credit you would want, whether it’s one of those neat cash back credit cards or a mortgage. On the other hand, if your credit score is 550 or lower, you may have a problem getting any kind of credit – unless you’re willing to pay a higher-than-normal interest rate.

How your FICO score is calculated

It’s impossible to say exactly how your FICO score is computed because the algorithm or formula that is used to calculate it is a closely guarded secret. However, it is believed that 35% of your score is based on your payment history or how well you’ve handled credit. 30% will be based on credit card utilization, which is the ratio of your current revolving debt to your total available revolving credit or credit limit. The length of your credit history accounts for 15% of your FICO score, 10% on the types of credit you’ve used and 10% on recent inquiries about your credit. The “hard” credit inquiries are those that came because you applied for new credit and can have a negative effect on your credit score, especially if you’ve done a lot of these.

How to get your FICO score

There are a number of different ways you could get your FICO score, though none of them will be exactly free. For example, you can go to FICO’s own website, www.myfico.com where you could get your score free if you would be willing to sign up for a trial subscription to its Score Watch program. The website www.creditkarma.com offers free credit scores but yours will not be the same as your FICO score as its based on an algorithm developed jointly by the three credit bureaus. However, it should be close enough to your true FICO score for you to know your credit standing. You can also get your scores from the three credit bureaus but, again, they will not be the same as your FICO score as each has its own way of calculating your score.

Have you seen your credit report recently?

If you haven’t seen your credit report lately, you should definitely get it. There is a federal law mandating that the three credit reporting bureaus give you a free copy annually. You could contact each one of them and get their report or go to www.freeannualcreditreport.com and get all three simultaneously. It’s important to get and review your credit reports carefully to make sure that none contains errors that could be negatively affecting your credit score.

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National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

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Moderate National Debt Relief Caller: Charlotte Transcribed WE 1/24/2021 Charlotte: Before I begin, I have to let you know that our call may be recorded. Can you tell me, how did you first hear about our National Debt Relief? JOAN: Oh, I don't know. I don't remember. I don't know how I heard about it. Charlotte: What made you decide to work with them? JOAN: Well, obviously, I needed to consolidate my debt. Charlotte: Tell me about the service program that they provided you with. JOAN: Well, I'm not done. But for me, it’s costly. What I did not like about it was that they add on. They say it's going to be X amount of dollars. But then what they do is they say, “Oh, well, we found another creditor that you need to…” So that'll be at a different part of the month and I don't like staggered bills. If I'm gonna pay a bill, whether it's to the phone company, the insurance company, whatever it might be, I want to pay that bill once a month. That's the only drawback. Charlotte: So let me get this. Normally, they are collecting the bills upfront. And then they work to get them paid off at a different rate. So everything wasn't collected all at once, if that's what I'm hearing correctly. JOAN: No, no, no. Every month, money is taken out of your account. And they pay X amount of dollars. Like let's say you owe $5,000 with Citibank, $500 in Credit One, whatever. They work out a deal with them and then they say, “Well, you have to pay $350 a month.” And they'll pay $20 a month towards -- they give you like around about how long it's going to take. Two years, two and a half years. And then they work it out that way. Charlotte: Now, what did you think about your negotiator? JOAN: I don't know. I just called up. It's a completely different department. So when you call up to sign up, it's very different. I don't remember that. It's just that they collected all the information. It was easy for me. I didn't have to go through and find whatever bills I wanted to put in the debt relief. They did that. Charlotte: So say you have questions or concerns. How did you get your questions or concerns addressed? JOAN: I would just ask and they answered it. They're very helpful like that. They'll answer any questions you have. And if they don’t know, they will find out. Charlotte: So was there not a particular person that you spoke with? JOAN: No, you don’t have one person that you deal with that just handles your account. Once you do – they’re like headhunters. Until you sign up, you're going to have that one person and even other people calling. Once your name is out there, they're going to keep calling you. So, once you sign up, then it's whoever answers the phone. It’s customer service. Charlotte: How comfortable did you feel working with National Debt Relief through this process? JOAN: I felt very comfortable, very safe. I was not worried about anything. Charlotte: Is there anything about this process that you would have liked to seen handled differently? JOAN: Yes. The way the payments come out. I'd rather have them one instead of … Charlotte: Everywhere. JOAN: Right. Well, not everywhere. For the most part, the bulk of them were. But then if there's one here, one there, they don't just extend it to another payment. And then the payments change, like the payment amount. You could pay $20 for six months, and then all of a sudden, it's $80 for the next three months, so you really don't know. Charlotte: So if you have to rate this experience on a scale of one to five, five is you’d recommend to friends, one you're pretty dissatisfied… JOAN: No. I would definitely recommend it to a friend. Charlotte: How would you say working with National Debt Relief has impact your life? JOAN: Well, it did help until I hit a speed bump. I'm in the middle of a divorce and my husband closed our checking account, of course. But so far, as a matter of fact, that's why I thought you were calling. I have to postpone the next month, so hopefully, they'll be able to postpone it, because I've been postponing it for a few months. Charlotte: Would it be okay if I posted your comments as a review on our public website for National Debt Relief? Because you did give us some really good feedback. JOAN: Yes, but not using my name. Charlotte: Okay, I will make it anonymous for you. I will also send over a link so that you can have it as a record for yourself at jdola20@yahoo.com. JOAN: Yes, but do not put that public. Charlotte: Oh, no, no, no. That doesn't go public. Definitely. How would you say working with National Debt Relief has impact your life. JOAN: Well, really, it would have helped if I could have stayed on the program. Charlotte: We’re recorded.

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