Bills Consolidation

[Alconbury]

My husband and I are thinking of doing a consolidation loan, but we will have to close out the accounts that are paid off. Do you think our FICO scores will take a big hit? We have history dating back to 1997. We could save so much money by doing this plus we want to buy a new vehicle soon. But we are not sure how this will effect our reports.

[radi8]

If you are paying off revolving debt, your scores may come up- perhaps considerably- because you've lowered your utilization.

The installment loan doesn't have much of an effect on FICO, but you may lose a few points for age of accounts depending on what else is on your report.

 

Closing the revolving accounts (assuming that is what you are paying off) will negate the FICO gains from lowered utilization- closed accounts aren't calculated. Can you leave them open but unused, chopping up the cards if need be? Close all but the oldest one would be my next preference, if you feel the open cards may lead to future difficulties.