Is it REALLY that bad for your credit to close credit card accounts?

[tremorviolet]

@DrDeth

Got a cite for this? Most CC lenders seem to lend on Report alone, unless it has changed in the last couple of years? Running a real actual FICO report costs a fair amount extra.

It costs us extra, it’s part of a lender’s deal with Fair Isaac. The whole point of FICO scores is to give the lender a number that it can use to rank applicants so each lender doesn’t have to come up with their own algorithm. It takes far less time to set interest rates by score than to hire someone to evaluate each credit report individually. There are slightly different FICO score for home buyers and auto purchasers but almost all lenders use some credit score variation.

From Wikipedia:

Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due to bad debt. Using credit scores, lenders determine who qualifies for a loan, at what interest rate, and to what credit limits. The use of credit- or identity-scoring before authorizing access to or granting credit is an implementation of a trusted system. While the most widely known score in the United States is FICO (the most widely used in the mortgage industry), there are many others, such as NextGen, VantageScore, and the CE Score.

The only loans I know of that don’t use a FICO score are some FHA loans which will take into account your credit history for the past 24 months instead of using a score. But almost everywhere else is gonna look at your FICO score, including such atypical uses as apartment leasing and insurance rates.