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Senior Contributor
Open123
Posts: 3,849
Registered: ‎02-23-2011

Re: Axing low CL cards?

[ Edited ]

If your goal is to attain higher CLs on future applications, then it would behoove you to purge low limit cards when feasible.

 

In the credit world, common sense is often lost on the underwriters with certain "rules" they all universally adhere to.  For instance, higher limits will beget higher limits with very few exceptions; and, toy limits will beget...toy limits.  When issuers notice your average CL is 10k, they assume that if given much less, you'd be less prone to use their card either because you're offended, utility concerns, and not enough spending power.  Coversely, if most of your cards are of the sub 1K range, no issuer will be willing to be first to extend you added credit (AmEx being an exception for some).

 

If your goal is to attain higher limits, then I'd purge the low limit cards asap and begin building higher limit cards.  You have Discover at $1,200, and your next app should be another at $2K plus, eventually toppping $5K for eligibility on the Signature Visa cards.  This process is MUCH easier during manual review when toy limit cards are "closed by consumer request," since they'll infer you are progressing and moving beyond building/rebuilding stage and ready to take on larger credit lines.

 

Search "toy limi hell."  You'll read many anecdotal stories on how to avoid this.

 

PS - With USAA $6K, I'd purge all those low limit cards unless you have a compelling reason (bonus spending, 0%, Exp Fico score, etc...) to keep them open.  In the long run, I don't find the "no fee, just SD, and keep aaoa" to be a very compelling reason to keep cards open.

Valued Contributor
Crashem
Posts: 3,098
Registered: ‎01-26-2012

Re: Axing low CL cards?

Looking at your cards, I am a little mixed up.  How is your aaoa 3 years.  A ton of your cards were obtained this year.

               LIMITS IN CARD DESCRIPTIONS
Frequent Contributor
jd5189
Posts: 470
Registered: ‎08-14-2012

Re: Axing low CL cards?


Crashem wrote:

Looking at your cards, I am a little mixed up.  How is your aaoa 3 years.  A ton of your cards were obtained this year.


Could be other accounts that are not CC based maybe such as other types of loans. For me, a hefty portion of my AAoA is contributed to my student loans. Are there two AAoA's considered when app'ing for cards (one AAoA for CC and another AAoA for all other accounts)?

I wondered this myself, because my credit report AAoA is 6.5 years due to my student loans, but my AAoA for CC would be much lower than that.

In my wallet: Amex PRG & Zync, Amex BCE (19.2k), Chase Freedom (5k), PSECU Visa/PSL (20k)
Current Scores: Equifax: 738 (Fako) TransUnion: 721 (Fico) Experian: 717 (Fico)
Disclaimer: I am by no means a financial advisor. My posts are based on opinion, experience, and/or knowledge.
Valued Contributor
Crashem
Posts: 3,098
Registered: ‎01-26-2012

Re: Axing low CL cards?


jd5189 wrote:

Crashem wrote:

Looking at your cards, I am a little mixed up.  How is your aaoa 3 years.  A ton of your cards were obtained this year.


Could be other accounts that are not CC based maybe such as other types of loans. For me, a hefty portion of my AAoA is contributed to my student loans. Are there two AAoA's considered when app'ing for cards (one AAoA for CC and another AAoA for all other accounts)?

I wondered this myself, because my credit report AAoA is 6.5 years due to my student loans, but my AAoA for CC would be much lower than that.


fico just looks at total aaoa but individual card issuers internal scoring might be different.  For example, I know chase tends to discount store cards for many of their scoring calculations such as utilization.  For op, seemed like a lot of recent cards to have aaoa being as high as it is even takinto into account other things.

               LIMITS IN CARD DESCRIPTIONS
Contributor
cassie3783
Posts: 95
Registered: ‎05-30-2012

Re: Axing low CL cards?

[ Edited ]

Crashem wrote:

Looking at your cards, I am a little mixed up.  How is your aaoa 3 years.  A ton of your cards were obtained this year.



Student loans are 10 years old, I have a credit card, closed but in good standing, from 7 years ago, car loan opened two years ago, a bank personal loan opened two years ago, etc.

 

It's mainly the student loans that are helping with the AAoA.

Current Score: EQ: ? ~ TU: 729 (Wal-Mart) ~ EX FACO: 725
Current Goal:750 across the board
Ultimate Goal: 800+
Chillin' (for real this time) in the garden for a while now until AT LEAST 12/2013. *sigh* Wish me luck!
Valued Contributor
Crashem
Posts: 3,098
Registered: ‎01-26-2012

Re: Axing low CL cards?


cassie3783 wrote:

Crashem wrote:

Looking at your cards, I am a little mixed up.  How is your aaoa 3 years.  A ton of your cards were obtained this year.



Student loans are 10 years old, I have a credit card, closed but in good standing, from 7 years ago, car loan opened two years ago.

 

It's mainly the student loans that are helping with the AAoA.


Ahh cool.  You sure aaoa is still 3 years with all those new cards included?  Careful though, closed accounts can fall off near 10 year mareh from when they were closed and your aaoa will dive then.

               LIMITS IN CARD DESCRIPTIONS
Contributor
cassie3783
Posts: 95
Registered: ‎05-30-2012

Re: Axing low CL cards?


Crashem wrote:

cassie3783 wrote:

Crashem wrote:

Looking at your cards, I am a little mixed up.  How is your aaoa 3 years.  A ton of your cards were obtained this year.



Student loans are 10 years old, I have a credit card, closed but in good standing, from 7 years ago, car loan opened two years ago.

 

It's mainly the student loans that are helping with the AAoA.


Ahh cool.  You sure aaoa is still 3 years with all those new cards included?  Careful though, closed accounts can fall off near 10 year mareh from when they were closed and your aaoa will dive then.


That's what my latest EQ & TU credit report both say.  I just pulled both about two weeks ago.

However, I will mention that the 6k USAA card isn't reporting as of yet on either reports.

 

Also, the student loans, they're still on my report.  I had them deferred for the longest time, but I'm paying on them now and it will be a good bit before they're completely paid off.

Current Score: EQ: ? ~ TU: 729 (Wal-Mart) ~ EX FACO: 725
Current Goal:750 across the board
Ultimate Goal: 800+
Chillin' (for real this time) in the garden for a while now until AT LEAST 12/2013. *sigh* Wish me luck!
Moderator
Revelate
Posts: 6,773
Registered: ‎12-30-2011

Re: Axing low CL cards?

While I tend to second Open's suggestion, let any card at least get to the six month mark before closing.

 

I don't recommend at all opening and then immediately closing, there's individual tradeline seasoning to be concerned about for your FICO score, and any lender is going to look at that report and you may have to explain your actions for the next 10 years as a result of appearing to apply for a bunch of cards you didn't need / want.

 

While that's easier later on down the road to 'splain away, it's an inconvenience that doesn't work in your favor from an underwriting perspective.


Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 672, Wally TU 686, EX 702 (04/14)
Goal Score: 700 in all three (01/01/15)


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Valued Member
OptimalFICO
Posts: 203
Registered: ‎07-05-2009

Re: Axing low CL cards?


cassie3783 wrote:

Currently in my wallet & their corresponding CL, dates opened & current interest %:

 

Wal-Mart: $400, 6/12, 23%

Credit Union MC: $1k, 6/12, 13.9%

Old Navy: $250, 5/12, 24.99%

Texaco (gas card, not the visa): $500, 6/12, 26.99%

Discover: $1,200, 5/12, 3.99%

USAA: $6K, 7/12, 0% for 12 months

Cap 1: $350, 3/11 (oldest card), 22.9%

Chase: $500, 7/12, 0.00% for 15 months.

 

Total CL: $10,200, current UTI: 13%

AAoA: 3 years

 

definitely think I got a little app spree happy after a few approvals & kept it up.  However, I'm in the garden now & not apping for anything at all until next year.

 

However, I'm considering cancelling a few of the lower CL, high interest cards, for a few reasons:

 

  •  bc of the low credit limit, it would only take buying 1 shirt, 1 gallon of gas, etc., to skyrocket my UTI.
  •  the interest rate is ridiculous.  although, I always plan to PIF each month, there may be a few months that doesn't happen & I don't want to pay an astronomical interest rate on a low balance.

I do, however, plan to keep the Cap1 in the sock drawer simply bc it's my oldest card.

 

Orrrr......should I just sock drawer them all & only pull them out once a month for a low amount transaction then pay it in full just to keep them active & reporting?  Honestly, 8 cards is a little much for me to continually keep up with each month & that's the main reason why I'm considering axing some of the unnecessary cards.

 

Any thoughts/advice/comments?

 

Thanks in advance!!  :smileyhappy:


I would keep and garden the following revolving accounts:

    Cap1 despite the annual fee for now (at least until you have other accounts open for at least one year, preferably two)

    USAA (love USAA, great customer service)

    Credit Union (great to have a CU relationship as they are typically cheaper on auto and other loans)

    Discover (Good CL and CLIs)

 

Since all of them were opened so recently, I would absolutely immediately close:

     Wal-Mart

     Old Navy

     Texaco

     Chase

 

The interest rates shouldn't matter as much per se, as it would be best if you don't maintain a balance anyway. Still you are left with a few cards with decent rates for the rare times you must carry a balance. Only reason to keep one of the cards in the close pile is if there is some benefit you will use often. Otherwise, it eventually hurts you to have too many accounts open. IMHO it's better to close them ASAP.

Valued Contributor
Crashem
Posts: 3,098
Registered: ‎01-26-2012

Re: Axing low CL cards?

I would probably ignore some of optimalfico advice about closing cards.  Do not close the gemb issued cards such as walmart, old navy and I'm not sure which other ones.  The main problem you have is that most of your cards are from not credit score friendly card issuers (ie hard pulls for cli).  Your gemb cards are your only soft pull based cli.  So keep them open and go for cli every 4 months.

               LIMITS IN CARD DESCRIPTIONS

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