Credit question...

[fuzzykitten99]

Tim and I put new windows on the house last year, and went through the window company's financing company to get them put in. We then went and took out a home equity line of credit to pay off the financing with the window company because their promotion of 6months no interest was just about up and the interest rate was way high-it was a line of credit, but not against the home itself, kind of like a credit card. The original credit line with the window company is still open, and can be used, but we don't plan to. My question is, do we call and have them close it, or leave it open?

I have heard it both ways. I hear if you close it on your own, it will increase your credit score or look good on paper if we request financing for something else. I also have heard it is not a good idea to close it because it makes you look like you don't have enough, or something.

Which is it? I have the instinct to call and close it, but I am wary of it.

 

[The ClayTaurus]

Tim and I put new windows on the house last year, and went through the window company's financing company to get them put in. We then went and took out a home equity line of credit to pay off the financing with the window company because their promotion of 6months no interest was just about up and the interest rate was way high-it was a line of credit, but not against the home itself, kind of like a credit card. The original credit line with the window company is still open, and can be used, but we don't plan to. My question is, do we call and have them close it, or leave it open?

I have heard it both ways. I hear if you close it on your own, it will increase your credit score or look good on paper if we request financing for something else. I also have heard it is not a good idea to close it because it makes you look like you don't have enough, or something.

Which is it? I have the instinct to call and close it, but I am wary of it.

Go ahead and close it. You only should consider keeping a dormant account open if you have a significant history with it. Since you only used this once, there's not much history you're losing, and if you don't plan to use it you might as well close it so you don't worry about someone ID thefting you on it.

On the other hand, if you don't have a lot of credit, you don't want to close all your credit accounts... but it sounds like this isn't you.

 

[Jimmyeatworld]

What Clay said... especially that last part.

Good credit is becoming more and more important, and if you have no credit or bad credit it can help you get back on the right road.

 

[Shattered]

You're better off keeping a line of credit open that you'll likely use again.. How many times are you going to use a line of credit for windows? Better to get a general one through your bank... Use it for minor things occasionally, to show some activity on it, and then leave it alone until you really need it.

 

[Annie]

Clay and Jimmy may well be right. My thinking on something like an 'equity line' is that if you've 'paid off the windows' is there something else you are going to need? Carpeting? Paint/Wallpaper? A home equity is a great way to keep your credit in good standing, with a better interest rate than credit cards and currently a possible tax deduction...

 

[GotZoom]

Everybody could be right. It really depends on what you plan on doing down the road. If you have good credit, not maxed out on your credit cards, etc...then it won't hurt to keep it opened. Like Shattered and Kathianne said, you never know when you might want to do more. It won't hurt you to have it open, as long as it isn't maxed out.

If you apply for credit down the road, again, as long as your aren't maxed or late on anything, the line of credit will just show "high credit" - credit that is available to you; not something that you are using and actually owe on.

 

[manu1959]

close the credit line with the window company and keep the line of credit on the house....but be careful with the line of credit on the house....if you screw that up they take the house

 

[fuzzykitten99]

thanks everyone.

the window company actually does more than windows. they do any type of remodeling you could want. we do eventually want mainenence free siding, but as the paint we have on the house is the 25yr stuff, i am in no hurry. also, we were thinking of having them do the downstairs bathroom, but we could not afford to make the payments for a while.

i'll probably close the account, since we don't plan to use it within the next 5 years.

 

[Mr. P]

...

Which is it? I have the instinct to call and close it, but I am wary of it.

This does focus on Credit cards..but, good info.

Tips for keeping your credit score up - April 27, 2005
Clark read a “Market Watch” story about credit reports recently that caused him some concern. It was about how much these reports influence your ability to get a car loan, a mortgage, car or home insurance and even the kind of job you get. Even worse, some questionable lenders are not reporting your good payments to the credit bureaus. Or, in the case of credit card companies, they are not reporting your credit limit. Therefore, it essentially looks like you’re using too much of your available credit when you may not be. So, when you get your credit reports look for what is NOT on there. That can be important. Also, you can lower your credit score by a good 10 percent if you’re using your home equity line at or near it’s maximum level. If you have a home equity line of $50,000 and you borrow that same amount, you score will drop fast. Same thing with credit cards. If you’re using more than one-third of the available credit, it could decimate your credit score. There are also a lot of things that may appear on a credit report that shouldn’t be there. So, challenge anything that shouldn’t be there. Also, closing old accounts could harm you. When you close an old account, you’re taking away an available credit line that helps bump up your score. Until a card has been inactive for two years, keep it open. There are tons of reports on us out there. Get acquainted with them!

http://clarkhoward.com/library/tips/credit_scores.html