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What is worse for your credit score - closing a credit card with a ZERO balance OR closing a credit card with an OPEN balance?

Davie, FL |

I know that closing credit can ding your score by up to 60 points but I need to close it because I share the card with a sibling and we don't want our credit to be tied together. The balance is all mine and I will pay it off but I can't all at once. The limit is $5,000 and the card is almost maxed out.

I would like to close it and continue making payments until the balance is zero. The other option would be to take a loan from my parents (which I'd rather not) to pay off the balance and close it.

Is it that much worse to close a cc with an open balance than it is to close a cc with a zero balance? If I wanted to purchase a car or apply for a cc of my own, which of the two options would make my credit look worse? And how long might it take for your credit to go back up to normal?

I wanted to add that for several reasons too long to explain there is NO WAY that I can keep the card open. I also cannot transfer the balance (although this would have been a great idea) since I do freelance work and I'm in between jobs right now. I haven't had steady work these past few months and I doubt I would be able to get a new credit card with at least a $5,000 limit to transfer the balance. What is the lesser of two evils - closing a credit card with a ZERO balance OR closing a credit card with an OPEN balance? Or is there not much difference?

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Attorney answers 1


Only the credit scoring companies can tell you for sure - they do not publish their criteria. The best guessers contend that the total amount of credit available to you and the total balance as a percentage of the available use are key issues in your score. If you agree with this contention, then you should keep the credit line open and not use it while you pay it down - if you want your sibling off the account, you might be able to transfer the balance to a new account that she does not have access to while maintaining the credit limit. As you pay down, your score should increase. If you close the account, the credit limit will decrease as your balance decreases, so it will appear that you are maxed out on that account. Depending on how much other credit you have and what percentage is used will be determinative of your resulting score.