Credit Cards and FICO score
I don't have a bunch of credit cards. I have never been huge on amassing loads of cards....In fact, I only have 3.....and one of them isnt in my name, as it is provided by the firm for T&E, so it doesnt even show on my credit report. We don't do department store cards, either.
Focusing on my 2 "real" credit cards...... 1. My credit score is fine. It isnt over 800 like some, but still just fine (above 700). I'd like to keep it that way. 2. I have had both credit cards for about 8 years now. 3. I know that closing an old account can actually hurt your credit score Here is where I need the guidance. One of the cards has an annual fee attached to it as part of a rewards program (airline miles). However, I almost never use the card and don't really care about the miles rewards. It is a waste to pay the annual fee, but I dont want to cancel. Assume that the credit card company offers a no-fee credit card, sans rewards program. If I switch from my current card to the new, no fee version, does that constitute "closing" my account and will it ding my FICO score? I called the company to ask but the customer service rep said that they do not comment on credit scores. I guess I could call one of the Big 3 and ask how they calculate, but does anyone here have experience with this? |
I am not an expert in this at all, so take this all with the appropriate grain of salt.
I have been told by people in the know that opening and closing credit cards causes only minor dings to your credit, to the tune of only a point or two. I frequently open and close cards within a few months period just to take advantage of whatever freebie is offered (15,000 miles, 10% off first purchase, whatever). My credit rating is as yours, quite healthy. When I check my rating periodically, I do get the "too many cards opened in last 12 months" message, but since my number is well over 700, I don't really care. Personal opinion: you're far worse to be actually paying out annual fees than accepting whatever minor hit you might take for closing a card. My 2 cents. |
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I have no clue how any of this is calculated and I doubt you'll be able to find any sort of calculation on how this works out. Credit is a mystery to me and I think it rather absurd that you don't have access to it but anyone else with your permission can see it and then not discuss it with you. |
Wow, really? Thanks for the info. I wonder if anyone else can attest to the minor ding. I had always assumed it would really "hurt" the score, but admittedly, I have never heard it quantified before. In my head, I pictured something like a 30 point drop....which, now that I think about it, would be pretty severe.
If that is really the case, I will close it today. After all, if my score drops from 799 to 798, what do I care? |
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We try to be pretty good at not carrying a balance, so truthfully, even the monthly APR isn't a huge issue to me. I just don't want to pay any more annual fees. |
For what it's worth, here's an interesting article on the topic from just a few months ago that came up via Google.
http://getrichslowly.org/blog/2008/0...a-credit-card/ |
Just close the account and quit being such a baby about it.
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Surfah, I would do as tex says and pull your report every now and then. In the past, I have found errors, including: 1. A series of unpaid medical bills for surgeries. I didnt have any surgery or medical bills, so that one was easy to get removed. 2. A late payment for some bank loan.....attributed to me but should have been attritbuted to someone living in Oklahoma. I had never taken out any such loan. 3. Department store charge cards that I never opened. It is pretty safe to say that the credit agencies are not perfect and need a little help from time to time. |
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Just because your score is shot doesnt mean I want mine to be that way. |
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