Will closing a line of credit before it is paid look bad on my credit report?
Andrea asked:
I have a line of credit through Bank of America. I was told it was a personal loan and the balance would go down each month. (I had consolidated 3 credit cards). I just found out it is technically called a line of credit and the interest is 23%! I am going to be applying for a mortgage soon and I know it looks like “potential debt” and that looks negative. But, is it worse to have the account closed and still be paying it off, or to pay it off then close it?
Kansieo.com
I have a line of credit through Bank of America. I was told it was a personal loan and the balance would go down each month. (I had consolidated 3 credit cards). I just found out it is technically called a line of credit and the interest is 23%! I am going to be applying for a mortgage soon and I know it looks like “potential debt” and that looks negative. But, is it worse to have the account closed and still be paying it off, or to pay it off then close it?
Kansieo.com
January 13th, 2009 at 10:01 pm
Create a video blog…instantly.
Chances are, if you close it, Bank of America will demand payment on the whole amount you owe. It technically isn’t closed until it’s paid in full.
January 16th, 2009 at 11:14 am
Caffeinated Content
You cannot close a line of credit until it has been repaid in full, and yes it will show up during your credit check through the bank after applying for the mortgage. However, you can include the cost of the line of credit into the mortgage to help pay it off, just be sure to tell the mortgage lender that is part of the funds you are requesting. It could help make it easier for the mortgage application process.
January 17th, 2009 at 10:40 am
Create a video blog…instantly.
it is best to close any form of credit after you have paid it all.
January 19th, 2009 at 5:18 pm
Caffeinated Content
if you can get a small personal loan (with MUCH LOWER interest rate to pay them off), its your best bet.
then it will be closed.
then order your free credit report, from each agency (1 per year, per agency is free).
Equifax
P.O. Box 740241
Atlanta, GA 30374
1-800-685-1111
_______________
Experian
P.O. Box 19719
Irvine, CA 92623
1-888-397-3742
_______________
TransUnion
P.O. Box 2000
Chester, PA 19022
1-800-916-8800