closing new account question

I have a Shell gas card that I closed after 12 months when they wanted to charge me an annual fee. Hoewver, I only started using it 4 months ago and have 4 positive months of "current" TL's.

I have a balance of $180 on it. My questions-

1. Is it better to just pay off the card because FICO score will look worse if you have a closed account with balance?

2. Is it better to just string the payments out for another 8 months or so so I'll have 12 months of activity on the card, so it will be a good TL?

3. After 8 months from now when the balance is fully paid, do lenders/FICO scoring look at the difference in time between when the account is closed vs. when it was paid off? I.e. is there a penalty for having an account closed 3/03 but with activity until 11/03, or woudl be a *good* thing?

1) I don't think so, and the scores will include the limit in the B/L ratio calculation as long as there is a balance. So that could help you, depending on the limit and your overall B/L ratio.

2) Unlikely, but could be, depending on the bureau and how it's reported.

3) It probably helps to have a later DLA, again, depends on the bureau.

I would stretch out the payments unless it increases your overall B/L ratio.

The balance doesn't affect my B/L much at all, so I'm not worried about that. I'm also looking at long-term FICO growth (i.e. 8-12 months from now), so in that time the balance will be zero whether I pay it off today or string out the payments for 8 months.

My only concern is what will look worse:

1. Account open for 4 months, then closed, fully paid, never late, but only 4 months of payments on it.

2. Account open for 4 months, then closed, fully paid, never late, with 12+ months of payments on it.

I don't know if lenders/FICO even notice when an account is closed relative to if payments continue on that account.

BTW, this similar scenario may apply to many FCNB account holders. Both my FCNB and Spigels card are closed. Although I've had both cards for over 2 years (so this is slightly different from the above case), I do have a couple hundred dollar balances with each card. I'm considering stringing out the payments for 8-10 months until I reach 3 years of positive tradelines.

Again, don't know if it makes a difference b/c I don't know how FICO score treats when an account is closed relatively to when payments are made.

I could see the case where FICO score would be lower if balance is owed on closed accounts, but I'm more interested in the result of my FICO score 8-12 months from now, when balances on Shell, FCNB, Spiegels card will all be zero anyways.

"I don't know if lenders/FICO even notice when an account is closed relative to if payments continue on that account. "

Neither do I. Experian often reports the the balance/payment history, but I don't know if scores look at it, and if the other bureaus report it to scores but not consumers.

However, it's really totally irrelevant for you. You need OPEN accounts with history!