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CKL824

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credit card utilization and credit limit
I used the credit score simulator to get an idea how my credit would improve by paying off an account and closing it. It showed my score would come up quite a few points by closing my oldest account. I did this and now I have read that doing this will hurt my score by decreasing my credit limit from closing this account. What the heck CK? Why put that option there if its going to hurt my score? I am trying to buy a house and improving my score and DTI ratio is my goal here. Anyone have any input?

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Well paying off any thing that you have a balance on does help your D/I ratio so that will help.  So the simulator looked only at the section having to do with paying off a debt.  I am not sure it accounts for the closing of it.  The Simulator does not consider your score as a whole, it only looks at one little section of it, and unfortunatly even what scores it gives you here are not the ones any lender will see unless they use the Vantage 3 system. It is very hard to tell what all happens when you make changes to your credit lines and would be too many factors for a simple simulator that is free. Just know in the future that closing ANY account will have a negative effect, even paying off a car loan can drop your score a liitle.

Debending on what your score is this really may not have any major effect. The best thing you can do is pay off any CC to help with your score this helps with the D/I.  If you were boarderline this MIGHT make a difference, but really if it gets to underwriting the underwriter will view the lower D/I and less debt as a good thing.

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