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I have 5 credit cards. Two of them pretty much sit idle and are never used (though I'll charge something small on them every once in a while, since many CC companies are now implementing annual fees on cards if you don't use them).
If I'm concerned about having the highest credit score possible, is it better to close those 2 cards, or just leave them open?
I pay off all cards in full every month. I would guess my monthly usage of all cards combined is about $600-1,000 and the credit limit of all cards combined is about $20,000 in total.
Location: 23.7 million to 162 million miles North of Venus
23,548 posts, read 12,525,568 times
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Quote:
Originally Posted by 0815
No, closing your credit card account does not always lower your score. The score considers the length of your credit history. The longer you've had your cards, the better your score will be. However, that really depends on your situation. If you have one credit card that has been open for 20 year, and one card that has been open for 2 years, it's not gonna hurt if you close the credit card that has been open for 2 years. It would actually help because that way your average lenth of your credit history would be longer - 20 years and not 10 years. So you shoud check when you opened all your accounts. You should have at least 2 major credit cards ( not store cards ). You say you have 5, so you're good. A lower limit won't damage the score ( unless it's really low... like under 1000 Dollars).
The average age of accounts will remain the same since the history on a closed account will continue to be a factor in scores. You're right about cards with low limits hurting scores.
5 accounts with a combined total of $20k credit limit is not over the top. You seem to be managing them well by using the two idle ones every once in a while to keep them active in FICO's eyes and paying your balances in full each month.
I wouldn't kick them to the curb unless they do get around to demanding a fee. If/when that happens you should consider getting a replacement card with a credit union and then closing the account that is implementing the fee.
I think we have to stop worshipping at the altar of FICO without taking other considerations into account.
The effect that closing cards has on your credit score depends on your overall utilization. The higher your utilizaton ratio is (the ratio of money owed/available credit), the worse an impact closing accounts will have, because you'd be lowering your available credit.
But if you don't owe much anyway, it will probably have minimal impact. You can check the effect of a hypothetical closing of accounts on your credit score at creditkarma.com.
If I had credit cards I wasn't using and the bank was going to start charging me fees on them, I'd be strongly disinclined to keep them open simply to help my credit score.
Location: 23.7 million to 162 million miles North of Venus
23,548 posts, read 12,525,568 times
Reputation: 10467
Quote:
Originally Posted by dazzleman
I think we have to stop worshipping at the altar of FICO without taking other considerations into account.
I am utterly sick of that comment. Those who post that comment must truly believe that FICO is a god and not for what it really is, which is a tool .. nothing more, nothing less. People spend far more time pampering their cars then they do thinking about their credit score, why are you not over in the automotive forum telling them to stop worshiping their vehicles?
Quote:
The effect that closing cards has on your credit score depends on your overall utilization. The higher your utilizaton ratio is (the ratio of money owed/available credit), the worse an impact closing accounts will have, because you'd be lowering your available credit.
Utilization is only a fraction of the data that is used in scoring.
Quote:
But if you don't owe much anyway, it will probably have minimal impact. You can check the effect of a hypothetical closing of accounts on your credit score at creditkarma.com.
By all means, send people to a fako site, that creditors don't even use, which uses a different scoring model where scores can fluctuate as much as 100 points from a true score. Plus, unless the card in question is the oldest card of the bunch, then the off brand CK version of the hypothetical effect would be even more useless.
Quote:
If I had credit cards I wasn't using and the bank was going to start charging me fees on them, I'd be strongly disinclined to keep them open simply to help my credit score.
IF the bank does decide to start charging a fee then I don't disagree with that statement. I wouldn't keep a card open that a bank suddenly adds a fee to, unless the rewards on the card consistently outpaced the fee, but, with a rarely used card then those kinds of rewards wouldn't happen.
Creditkarma isn't a fako site, as you call it. The credit score it gave me matched the one I got from the actual credit reporting company. It can give an indication of what happens to your credit score if you make certain changes.
As far as FICO goes, yes, many people worship at the altar of that score, and make foolish financial decisions in order to chase a higher score. It's nice to have a high FICO score, but what leads to a high FICO score is not always in the best interests of everybody's overall financial picture, and if I have to choose between making good financial decisions, and having a marginally higher FICO score, I'll choose the former. My sincerest apologies for making a comment that you're sick of, but unfortunately it happens to be true, whether you want to accept it or not. But if you wish to make bad financial decisions, by all means go right ahead.
Location: 23.7 million to 162 million miles North of Venus
23,548 posts, read 12,525,568 times
Reputation: 10467
Quote:
Originally Posted by dazzleman
Creditkarma isn't a fako site, as you call it.
Please tell me which creditor uses CK. You don't have a clue what fako means in this context do you?
Quote:
The credit score it gave me matched the one I got from the actual credit reporting company. It can give an indication of what happens to your credit score if you make certain changes.
I never said that a fako would never match a fico, I simply said that a fako can fluctuate widely compared to a true score. Just because yours happened to be on the nose don't think for a second that it happens for all, in fact it happens for fewer than you would realize.
Quote:
As far as FICO goes, yes, many people worship at the altar of that score
If you believe that people are worshiping at the altar, then you must believe that fico is a god, or, you believe that they believe it. Who and where are these many people that you are talking about?
Quote:
and make foolish financial decisions in order to chase a higher score. It's nice to have a high FICO score, but what leads to a high FICO score is not always in the best interests of everybody's overall financial picture, and if I have to choose between making good financial decisions, and having a marginally higher FICO score, I'll choose the former.
If one makes sound financial decisions then their scores should be sound also, if not immediately, then eventually.
Quote:
My sincerest apologies for making a comment that you're sick of, but unfortunately it happens to be true, whether you want to accept it or not.
Somehow I don't get the feeling that was sincere.
Quote:
But if you wish to make bad financial decisions, by all means go right ahead.
Personal slam aside, what is your basis for this remark? Because I said that fico is a tool to be used and not a god??? Seriously, I am curious to know what bad financial decisions you are claiming I am making in that comment of yours.
I would not be too concerned. The hit would be small and of short duration. I would close them out. Reducing your debt should be your concern, not your FICO score.
Please tell me which creditor uses CK. You don't have a clue what fako means in this context do you?
I never said that a fako would never match a fico, I simply said that a fako can fluctuate widely compared to a true score. Just because yours happened to be on the nose don't think for a second that it happens for all, in fact it happens for fewer than you would realize.
If you believe that people are worshiping at the altar, then you must believe that fico is a god, or, you believe that they believe it. Who and where are these many people that you are talking about?
If one makes sound financial decisions then their scores should be sound also, if not immediately, then eventually.
Somehow I don't get the feeling that was sincere.
Personal slam aside, what is your basis for this remark? Because I said that fico is a tool to be used and not a god??? Seriously, I am curious to know what bad financial decisions you are claiming I am making in that comment of yours.
Based upon your tone from your original response and this one, I don't think it would be fruitful for me to enter into a discussion with you.
Last edited by dazzleman; 06-20-2010 at 08:30 AM..
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and not for what it really is, which is a tool .. nothing more, nothing less. People spend far more time pampering their cars then they do thinking about their credit score, why are you not over in the automotive forum telling them to stop worshiping their vehicles? 
