How Do I Break Out Of This Cycle (Credit Rating Repair)?

[Mr.Slant]

Cheese,

We’ve had discussions on this board about it before, but basically, among other factors, the FICO/similar engines want:
A guy with 1 or 2 bank cards
All accounts to be as old as possible (they calculate average age of account, after a fashion)
Few recent credit inquiries

Thus, keeping your oldest trade line is a plus, and limiting the number of open bank cards is also a plus.

[dracoi]

@Cheesesteak

I’m also curious why closing cards, after paying them off, is bad for your credit. Isn’t it better to have fewer open credit lines when you’re going for a loan? I’m not even sure why anyone would consider it a negative for a person to decide that they don’t need a particular credit line, and shut it down. It looks like sound financial decision making to me.

It’s not so much that closing an account is bad, but that the average age of your accounts is good.

Of course, some of it might be personal. When I canceled one American Express card (the one with a high annual fee), they increased the interest rate and lowered my credit limit on the other one (the one with no annual fee). No other credit company seemed to care and it didn’t change my FICO score otherwise.

[Moirai]

@Captain_Amazing

In case anyone doesn’t know, the credit agencies are required by law to give you a free copy of your credit report once a year. Here’s a website where you can request copies:

Annual Credit Report.com - Home Page

And be smart about it- get the report from company #1 right now, then in 4 months get the report from company #2, and in another 4 months get the report from company #3. Bingo- three free credit reports every year, and 3-4 months at a time is a good period to check on your credit. Most (if not all) of the info will be identical on all three reports, so there is little reason to get them all at once.