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Old Sep 29, 14, 1:46 pm   #1
 
Join Date: Aug 2014
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Canceling credit cards: what is your strategy?

I have been looking over my credit report from creditkarma.com, in preparation to possibly apply for 2-3 more cards before the end of the year.

The only thing I rate a "C" on (everything else is scored as an "A") is credit history. My average credit history is 5 years.

# of current open cards: 7
Oldest open credit card: 20 years
Newest open credit card: 3 months
Current Creditkarma.com score = 760

Of these cards, I only use two of them to accumulate miles/points. The other ones are:

Card #1: 20 years
Card #2: ~10 years
Card #3: 3 years
Card #4: 2 years
Card #5: 2 years

None of these cards have annual fees. They are free if I want to keep them around. But should I cancel a few of them? (i.e. #4 and #5) to improve my credit score and decrease the # of total cards I have?

What other considerations should I make before I cancel a credit card?

Thanks for your advice!
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Old Sep 29, 14, 2:44 pm   #2
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I suggest you search this forum for the words "cancel" and "cancelling". Do NOT cancel cards with no ann. fee! You want to "age" your credit. The more "old" cards the better. This will help your score.

"Average credit history" is a thorn in the side of churners, like many of us on this site. My FICO is ~ 800 and would be higher if I paid ann. fees and never cancelled cards. But that's NOT going to happen. If there is a fee I cancel at 11 or 12 months.

I'd also suggest www.creditboards.com for more info.
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Old Sep 29, 14, 2:46 pm   #3
 
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Thank you for the advice. I will search this forum with "cancel" and "cancelling," thanks for this suggestion!
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Old Oct 1, 14, 9:24 am   #4
 
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Quote:
Originally Posted by nsc168 View Post
Canceling credit cards: what is your strategy?
I close whatever isn't of use to me. Use might only mean "for padding utilization".

Quote:
Originally Posted by nsc168 View Post
The only thing I rate a "C" on (everything else is scored as an "A") is credit history. My average credit history is 5 years.
Take that with a grain of salt. CK only considers your open accounts so what they're actually providing is AAoOA. FICO looks at AAoA which inlcudes your closed accounts. Your closed accounts will typically continue to report and factor into AAoA for 10 years after closure.

What is immediatley impacted, however, is utilization since you lose available credit.

Quote:
Originally Posted by nsc168 View Post
But should I cancel a few of them? (i.e. #4 and #5) to improve my credit score and decrease the # of total cards I have?
Why do you think closing them will improve your score? What factors will be improved by closing? Your score is based on the following:
http://www.myfico.com/crediteducatio...yourscore.aspx

Closing an account isn't going to increase your AAoA.

Quote:
Originally Posted by nsc168 View Post
What other considerations should I make before I cancel a credit card?
Do the math to determine what your utilization would be before and after closing. Don't rely on the CK score.

Last edited by takeshi74; Oct 1, 14 at 9:32 am.
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Old Oct 1, 14, 10:57 am   #5
 
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Quote:
Originally Posted by nsc168 View Post
I have been looking over my credit report from creditkarma.com, in preparation to possibly apply for 2-3 more cards before the end of the year.

The only thing I rate a "C" on (everything else is scored as an "A") is credit history. My average credit history is 5 years.

# of current open cards: 7
Oldest open credit card: 20 years
Newest open credit card: 3 months
Current Creditkarma.com score = 760

Of these cards, I only use two of them to accumulate miles/points. The other ones are:

Card #1: 20 years
Card #2: ~10 years
Card #3: 3 years
Card #4: 2 years
Card #5: 2 years

None of these cards have annual fees. They are free if I want to keep them around. But should I cancel a few of them? (i.e. #4 and #5) to improve my credit score and decrease the # of total cards I have?

What other considerations should I make before I cancel a credit card?

Thanks for your advice!
So benefits and issues with closing cards 3-5:

In about 7-8 years, those cards would drop off your account and your average account age would increase. Of course, you'd have added many other cards at the same time.

If you kept the cards, even as you added more cards to your account, those 5 with constantly, now and forever, be pulling your AAA up.

However, those cards also have credit tied up in them; the more credit access you have, the more banks might question why you need access to more credit, especially if you already have credit with them. I'd consider lowering the credit limits on them if you can. Even then, issuers might ask why you want more cards when you already have x number of cards with them. In short, you lose a churn-spot.

Personally, I'd keep the cards unless you have more than 2 with just one issuer (or at least an issuer you'd like to churn with).
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Old Oct 1, 14, 11:04 am   #6
 
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Quote:
Originally Posted by takeshi74 View Post
What is immediatley impacted, however, is utilization since you lose available credit.

Do the math to determine what your utilization would be before and after closing. Don't rely on the CK score.
Thanks. I will do that. At the moment, my credit utilization fluctuates between about 4% and 11%.
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Old Oct 1, 14, 11:09 am   #7
 
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Quote:
Originally Posted by anime333 View Post

However, those cards also have credit tied up in them; the more credit access you have, the more banks might question why you need access to more credit, especially if you already have credit with them. I'd consider lowering the credit limits on them if you can. Even then, issuers might ask why you want more cards when you already have x number of cards with them. In short, you lose a churn-spot.

Personally, I'd keep the cards unless you have more than 2 with just one issuer (or at least an issuer you'd like to churn with).
Thanks! That's my concern about new apps: issuers might question why I want more credit. My current utilization fluctuates between 4% and 11%. Because my utilization can be very low, I am thinking that that's one of the reasons why I did not get an instant approval yesterday (applied for SW Premiere card).

So, I'm thinking maybe I should go and decrease my credit limits a bit, especially on my United Explorer card (Chase) because I'm planning on opening a few more Chase cards. What is an ideal "utilization rate"? I can increase my utilization by decreasing credit limits across my cards (especially the ones I am not currently using).
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Old Oct 1, 14, 12:20 pm   #8
 
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I closed my FIA cards after Fidelity closed my accounts and then transfered the credit limit to my BoA Cash Rewards Privileges which gets 2.5% cashback.
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Old Oct 2, 14, 5:18 pm   #9
 
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Originally Posted by philemer View Post
I suggest you search this forum for the words "cancel" and "cancelling". Do NOT cancel cards with no ann. fee! You want to "age" your credit. The more "old" cards the better. This will help your score.
If I didn't cancel cards with NAF at any given time I would have 20 plus cards open.

If you churn the Hilton Visa heavily (15 for me so far) you have to close cards.

I have the NAF Whydham and NAF Arrival open now that I will also close as Barclay can be tough with credit.

I have 2 long term cards, Hilton Amex and one Hilton Visa
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Old Oct 2, 14, 6:47 pm   #10
 
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How about if you "merge" credit lines when closing an account? Does that count for anything other then increasing your limits?
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Old Oct 3, 14, 11:27 am   #11
 
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Originally Posted by msp3 View Post
How about if you "merge" credit lines when closing an account? Does that count for anything other then increasing your limits?
That's a good idea. I'll look into that.
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Old Oct 4, 14, 7:39 pm   #12
 
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Keep the oldest two cards open and close the newest 3. Then start over applying for more bonuses.
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