From the lean days, the days of using 0% balance transfers to stay afloat. There’re probably about 5-6, I don’t want. And would just like to kill. But I hear that closing them out dings my FICO score. Which I can’t wrap my mind around but then FICO seems to be a mystery. So how can I get rid of these?
The reason your credit score takes a hit when you close a credit account is that it reduces your available credit, which changes your debt to credit ratio. Creditors want to see that you have more credit available than you are currently using.
The best way is to just cut up the cards without closing the account, which preserves your debt to credit ratio. However, unless you use your credit cards from time to time and pay off the balance, the card companies will close your accounts anyway.
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If you aren’t planning to use your credit for 6-12 months for anything major just close one of the accounts while maintaining good credit practices otherwise. When your score comes up again (which it will) close another account. That way you decided when the dip in your score happens instead of the credit card companies.
FICO: The exact number of points you get for different things is both a small mystery and differs by the model since there are dozens of slightly different FICO scores in regular use by banks, insurers, landlords, etc. Both different models, ie “insurance model” and different years, ie 05, 98, etc.
But the basics are well understood, to have a really great FICO score you need:
Absolutely huge factors:
No Bankruptcies
No deliquencies at all, no collections at all (if any, more recent is way worse than old, 30 day better than 60, etc)
You should be using a very small portion of your available credit, both as an aggregate AND on any individual card. IE, want to be at like $800 (8%) of your 10,000 credit line, not $1999 (99%) of your $2000 credit line.
Medium factors:
Average age of accounts needs to be high. The older the better.
Available credit should be decent
Small factors:
Low number of hard inquiries (when you apply for credit)
Different types of loans on your record, IE mortgage, credit card, and auto loans
Closing old cards hits your “available credit” one hardest, but it only really matters if it leaves you with just a few cards and you use a decent portion of their credit line.
It eventually hits the average age of accounts one, as closed cards stay on your credit report but eventually drop off (after a minimum of 7 years).
I remember reading that if you want to close a credit card account, you should ask that the credit report say that the account was closed at the customer’s request.
Is your credit score pretty good as of right now? If so, can you ask any of your card issuers to increase your credit line?
Perhaps you could close one or more cards (perhaps one at a time as Broomstick suggests), and ask one of the issuers you plan to keep for a higher credit line?
I had a MasterCard through Chase bank. They had a tie-in deal with Speedway gas station, every time you used the card, you got Speedway rewards points. (At one time, the apt I lived in let you put your rent on your card. About every 10 months, I got a $200 gas card with my rewards points!)
When their arrangement expired, Chase sent me a letter with a new card, explaining that they would be closing my MasterCard, and here was a VISA card, instead. I never read the letter. I thought it was another of those deals where “You’re pre-approved, just activate the card!!” Silly me, I cut the card in half, and threw it away. One week later, my MasterCard doesn’t work.
I called the 1-800#, had a half hour conversation with a person who barely spoke English, and finally I blew up, because this is my money we’re talking about, and I don’t mean to be offensive, but is there anyone there that speaks English better than you?! :mad: :mad:
I was promptly transferred to a man in Houston, TX. I calmed down, we talked. I got mad again, when I found out, that although the account was closed through no fault of my own, yes, my credit score would take a hit.
Screw Chase bank. I called Discover. Talked (and vented) with the nice lady a bit. (She commiserated with my tale of woe…) She cautioned me to wait a year before closing the VISA account, because one closed account is not too bad, it’s to be expected from time to time. But two in a year “looks bad.”
My advice? Close one per year, and screw Chase bank! 
Trust me when I say closing cards yourself doesn’t do anything to your score. I close probably 15-20 cards a year and still maintain around an 800 fico. On the other hand, I let one card statement end at 1999 out of 2000, out of maybe $250,000 total credit lines on all cards, and it dropped 50-70 points to 730-750ish depending on where I looked. That’s only a temporary, one month drop though, goes right back up when I pay the card off.
The guy was full of baloney. Your net number of accounts remained the same. You had (I presume) the same credit limit. You did not have a hard credit inquiry.
The mere fact that you had an account closure is not relevant. It’s the ratio of credit used to available credit, and total open accounts. Neither of those changed.
That said: I used to have a Visa tied to Toys R Us. They out of the blue changed it to a Master Card - and this was the card we ran everything through including a number of auto-billed purchases. It was a HUGE hassle. So we quit using it - but kept the account open (we use it 1-2 times a year to keep it going). And yeah, this was Chase as well.
This seems like an excellent idea. In principle it should be a no-brainer since you’re just consolidating credit that other institutions have already determined you’re eligible for, in order to maintain the same debt to credit ratio. In reality, there seems to be very little rationality in the world of credit. But it’s certainly worth a try, explaining to credit card company “x” that you would like to close credit card “y” and give them the business and would like at least some of the corresponding credit line.
But too much available credit also hurts.
Look, just find the oldest account and save that. Open a new account with great rates and great bennies. Close the rest.
Unless you are just about to buy a house or refi.
How many cards do you have? That sounds crazy.
I think I have about 40 current cards between my wife and I. I churn signup bonuses for cash and hotel points/airline miles. There are whole groups of people who do the same, see reddit churning or flyertalk for big communities.
I do too. It really works if you don’t carry a balance. I haven’t paid for a personal plane ticket in years and I travel for pleasure several times a year often with two kids. While the credit card companies are trying to figure out ways to screw other people, I am working in the opposite direction to figure out how to screw them and/or their partners. It isn’t that hard and doesn’t take a lot of time. You just have to know what types of offers are unusually generous and grab them when they pop up.
I agree with you and others. Closing cards is no big deal. I do it all the time because I generally just take the intro bonus and run especially if there is an annual fee after the first year. The one card I will not close is my oldest one that I have had since I was in college even though I only use it once a year or so to keep it active. That card maintains my total length of credit history which is a much more important factor than opening and closing the others. The advice to keep you oldest card open (as long as it doesn’t have an annual fee) applies to everyone.
I just checked and my credit scores according to Credit Karma are above 830 so repeatedly opening and closing cards isn’t the negative that many people assume that it is.
“Oldest line of credit” is part of your credit score. I would not close my oldest credit card (unless it had a fee).