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Will Closing an Account Hurt My Credit Score?

Posted in Credit Cards, Debt Consolidation, Personal Finance | May 12, 2014

Q: My wife and I are trying to consolidate and pay down our credit card debt, which will give us a lower payment and interest rate. She thinks we should close out the old accounts so we don’t run the balances back up. I’m concerned that by closing out our accounts, we’ll cause our FICO scores to go down. What should we do? A: You are both correct. Here’s what you need to consider. Debt Consolidation: Why You Should Close Your Accounts This is what your wife is getting at:Whether you use a home equity loan, a personal loan, a balance transfer credit card or another scheme, debt consolidation means paying off multiple accounts and replacing them with a loan with better terms. Notice that you have NOT reduced your