August 24th, 2010
This Week’s Top Credit Questions – Confused About Credit
Sometimes there are disagreements amongst Credit Karma consumers about how to handle certain situations—to close or not to close a credit card, to pay off this or that, and more. One thing is for sure—we are proud the Credit Karma community has something to say about it.
Check out some of the conversations buzzing at the Credit Advice Center…
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By how much does a credit inquiry drop your credit score?
Asked by drod12
A hard inquiry, which is a credit check done by a lender or issuer, can drop your score anywhere between 1 to 25 points, depending on your particular credit history. The inquiry impacts your score up to 6 months or a year, after that, it’s listed on your credit report for 2 years before it falls off. A soft inquiry, which is like a background check done by people like landlords, employers, and also when you check your score with Credit Karma, will not impact your credit score whatsoever. Make sure you know the difference between a hard versus soft inquiry.
Also keep in mind that while a hard inquiry has relatively minor impact on your credit score, racking up many hard inquiries from applying to multiple lenders or credit cards will add up to more significant damage.
Should I close my credit card account if I just want to pay it off?
Asked by env
MissElphe: Depends on your discipline. I would say probably not. Having the account open will help your credit. But you don’t need to use it necessarily. If you’re afraid that in a moment of weakness you’ll charge it up again, cut it up. Make it a party with any friends or significant other who are on the dumping debt band wagon with you.
Dbs1962: I wouldn’t. It will lower your score. Pay it off and keep it and use it once in a while. If it has high interest rate buy small and pay it off on every cycle. I have one like that and use it sparingly but it helps your rating.
What bills do I pay off first when fixing credit?
Asked by KIRONLO
Beno42: Go after your highest interest debt first. This will help eventually pay everything off faster and at less expense.
Bprice: I agree with the other response, pay off highest interest first. Depending on how much your interest rates are, you might be better off consolidating your interest with a balance transfer. The catch is that you have to PAY OFF THE DEBT COMPLETELY before the 0% period ends or else you will be charged back interest at the new rate for the whole period and amount…
KIRONLO: Thanks for the help. Now, it’s time to get started.
Will leaving old, paid-in-full credit card accounts open hurt my credit score?
Asked by cdupriest
PiscesFire: I’m pretty sure leaving old, paid-in-full credit card accounts HELP your credit score. The older your credit is, the better.
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Stop by the Credit Advice Center yourself to post your own credit question or post some smart answers of your own!
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I was wondering, if I paid off and canceled a card, does the score I had before I paid the card off remain/go up? And does this score influence my ability to start a new card off with a better credit limit?
Paying off a debt is good and is usually a credit score-booster… however, closing your credit card lowers your credit utilization rate because you have less total available credit. So overall, depending on whats on the rest of your credit report, closing a credit card may negatively impact your credit score. If it hasn’t shown up on your credit report yet, check out the Credit Simulator on Credit Karma because you can simulate what could happen to your credit score if u closed your card.
and yes, your credit score following your closed credit card will likely affect your ability to get new credit, especially if it caused your credit score to drop a lot. If the Credit Simulator shows that your credit score would be damaged if you close your credit card, why not just pay off your card and keep it open, charging it with small purchases every now and then and paying it off in full to make sure you are responsibly using credit and maintaining a good on-time payment history.