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Established Member
TheDiceMan
Posts: 12
Registered: ‎01-20-2012
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Closing sub prime cards a good strategy?

I'm starting to build my credit but I have limited credit history. I've got a capital one secured card, Orchard Bank visa, and Applied bank secured Visa. I only plan to use the Orchard Bank and Applied bank until I can get approved for better cards. It is a bad idea to close those accounts in about 6 months If I'm approved for better cards?


Starting Score: January 17, 2012 Trans: 656 EQ: 651 Creditkarma: 669 CreditSesame: 650 Exquifax Score Card:560-659
Current Score: Trans: 672 EQ: 654 Creditkarma: 708 CreditSesame: 670 Exquifax Score Card:560-659
Goal Score: 720+


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My Cards: Capital One Secured Platinum($400), Orchard Bank Visa Classic($300), Capital One No Hassle Miles($750)
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LS2982
Posts: 15,434
Registered: ‎04-09-2011
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Re: Closing sub prime cards a good strategy?


TheDiceMan wrote:

I'm starting to build my credit but I have limited credit history. I've got a capital one secured card, Orchard Bank visa, and Applied bank secured Visa. I only plan to use the Orchard Bank and Applied bank until I can get approved for better cards. It is a bad idea to close those accounts in about 6 months If I'm approved for better cards?


I would try to keep them for the year and close before AF hits. Get the full year of reporting!




Silver Spade Garden Club Member - Last App 12/16/13 - Looking for a clean slate NO INQ's / Diamond Inspired!
Starting Score:
EX (PLUS) 583 EQ FICO 565 TU FICO 590 3/15/2011 / Goal Scores: 720
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Mustanglvr2006
Posts: 1,971
Registered: ‎02-06-2011
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Re: Closing sub prime cards a good strategy?


LS2982 wrote:

TheDiceMan wrote:

I'm starting to build my credit but I have limited credit history. I've got a capital one secured card, Orchard Bank visa, and Applied bank secured Visa. I only plan to use the Orchard Bank and Applied bank until I can get approved for better cards. It is a bad idea to close those accounts in about 6 months If I'm approved for better cards?


I would try to keep them for the year and close before AF hits. Get the full year of reporting!


+1

 

I agree with LS.


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Established Contributor
Smug
Posts: 961
Registered: ‎12-21-2010
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Re: Closing sub prime cards a good strategy?

I closed my sub prime cards, 7 in all because I never used them 2 being cap 1s a HSBC discover, target and a few more , no drop in score and now I focus on higher cards. I am happy I closed them.
Experian® 808/Equifax® ?/TransUnion® 810
Baddies Experian® clean/Equifax® 1/TransUnion® Clean
Last CLI 6-13-2013
Total Credit $121,190.00
Goal 780!
Senior Contributor
Open123
Posts: 4,089
Registered: ‎02-23-2011
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Re: Closing sub prime cards a good strategy?

It's always a good idea to close "subprime" cards the moment you no longer need them.  In most cases, waiting for a year will be better than 6 months, unless there's a massive annual fee on month 12.

Established Contributor
Cdnewmanpac
Posts: 767
Registered: ‎01-16-2012
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Re: Closing sub prime cards a good strategy?

I don't see the value in closing these before you get at least one prime card. Most scoring experts advise having 2-3 open revolving accounts. It will also help your utilization to keep all 3. Once you have had the cards for almost a year, apply for a card you want. If you get it, close the card with the highest AF. Then replace the cards one for one as you get new ones. If you get denied, especially if the reason is that you already have sufficient credit, calling and saying you are trying to replace subprime cards is a good recon strategy.
In wallet: Ink Plus 10k, AMEX TE 25k. In bag: CSP 16k, USAA WMC 15k, Hyatt 13k, United MPE 12k, AMEX HHonors 3k. In SD: Cap 1 QS 5k, Discover IT 7k. FICO 08 says my EQ is now 844, was 510 in 2010.
Mega Contributor
LS2982
Posts: 15,434
Registered: ‎04-09-2011
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Re: Closing sub prime cards a good strategy?


Cdnewmanpac wrote:
I don't see the value in closing these before you get at least one prime card. Most scoring experts advise having 2-3 open revolving accounts. It will also help your utilization to keep all 3. Once you have had the cards for almost a year, apply for a card you want. If you get it, close the card with the highest AF. Then replace the cards one for one as you get new ones. If you get denied, especially if the reason is that you already have sufficient credit, calling and saying you are trying to replace subprime cards is a good recon strategy.

+1




Silver Spade Garden Club Member - Last App 12/16/13 - Looking for a clean slate NO INQ's / Diamond Inspired!
Starting Score:
EX (PLUS) 583 EQ FICO 565 TU FICO 590 3/15/2011 / Goal Scores: 720
Current Score: EX FICO (PSECU) 671 (myFICO) N/A / EQ FICO 679 / TU08 FICO 678 / TU VS 706 3/6/2014
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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: Closing sub prime cards a good strategy?


TheDiceMan wrote:

I'm starting to build my credit but I have limited credit history. I've got a capital one secured card, Orchard Bank visa, and Applied bank secured Visa. I only plan to use the Orchard Bank and Applied bank until I can get approved for better cards. It is a bad idea to close those accounts in about 6 months If I'm approved for better cards?


Sounds like a plan, since you wrote that you first want to get better cards.

 

As others wrote, hold off until right before the AF hits if you can. Make sure that they are reporting a $0 balance, and print out the screen showing that. Ask them to send a letter confirming that they were closed in good standing, and that there is no balance. (Ya never know...)

 

I would add one good card, then close one rebuilder, etc., one at a time. Make sure that, if you allow balances to report, your total CL remains as high or higher, so that your scores aren't affected.

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Established Member
TheDiceMan
Posts: 12
Registered: ‎01-20-2012
0

Re: Closing sub prime cards a good strategy?

Another thing thats been going on recently is that American Express has been sending me offers. Twice so far. I'm tempted but I'm not sure I'll be approved. They're offering the Gold card so far. Is it a good idea to apply now. I already have 3 credit cards but I heard having American Express on your credit report makes it look good. Should I go for it?


Starting Score: January 17, 2012 Trans: 656 EQ: 651 Creditkarma: 669 CreditSesame: 650 Exquifax Score Card:560-659
Current Score: Trans: 672 EQ: 654 Creditkarma: 708 CreditSesame: 670 Exquifax Score Card:560-659
Goal Score: 720+


Take the FICO Fitness Challenge

My Cards: Capital One Secured Platinum($400), Orchard Bank Visa Classic($300), Capital One No Hassle Miles($750)
Senior Contributor
bichonmom
Posts: 3,318
Registered: ‎05-05-2011
0

Re: Closing sub prime cards a good strategy?


TheDiceMan wrote:

Another thing thats been going on recently is that American Express has been sending me offers. Twice so far. I'm tempted but I'm not sure I'll be approved. They're offering the Gold card so far. Is it a good idea to apply now. I already have 3 credit cards but I heard having American Express on your credit report makes it look good. Should I go for it?


In general, Amex likes to see at least a year of CC history. Some here have reported getting the Amex Zync (supposedly easier to qualify for than their other CCs) with less than a year.

 

The "pre-approval" they send doesn't mean that you really qualify for the CC. I'd wait until you have *at least* 6 mos of history (though, I think closer to a year is better) and zero balances reporting on ALL your CCs, except allow ONE CC to report a balance of <9%. Also, make sure your EX report is clean -- no baddies and VERY few inq. :smileyhappy:

 

BTW, there is no evidence that having an Amex on your CR makes it look good or gets you more credit. It's more of a status symbol when you're using it out at restaurants, stores, etc.

 

 

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Edits, funky spacing and spelling due to my iPad not getting along with the forum editor!


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