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Valued Contributor
navigatethis12
Posts: 1,954
Registered: ‎01-24-2012
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Re: Low - limit cards underrated?

I have a Chase Amazon Visa and an American Express Blue Cash Everyday (recently reduced to 1000 from 10000 for not using it for a few months) at 1000 and will never ask for an increase on either. I only use the Chase Amazon on Amazon and American Express occasionally for groceries. I see no reason to have the limits above 1000 and would rather have that extra credit on another card I will use. These limits have not stopped me from getting higher limits and no underwriter has questioned it.

Valued Contributor
beb86
Posts: 1,115
Registered: ‎10-31-2011
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Re: Low - limit cards underrated?


kevinjjc wrote:

beb86 wrote:

closing.credit cards wont affect your AAoA since a positive TL will continue to report for 10 years from the date closed


I agree, it won't affect your AAoA for 10 years while it continues to report.

 

I disagree, it will affect your AAoA once it stops reporting after 10 years.


yes that is pretty much assumed 

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Valued Contributor
MovingForward_2012
Posts: 3,406
Registered: ‎12-19-2012
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Re: Low - limit cards underrated?

I thought part of what goes into your AAOA is oldest OPEN accounts? When ever I close something, like pay off a loan my score goes down slightly but once the replacement is added it goes back up.

It still reports closed but it isn't open which means management of that account ceased and creditors can no longer get a full picture if it was the oldest account that was closed. My student loans are 14 years old in good standing always, once they are paid off and closed, I will need an open account back there to help my AAOA. Which is my Orchard card. Started at $300 now at $1100 CL for all eternity. I don't think I will ever close it but we'll see. :smileyhappy:
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
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bs6054
Posts: 1,673
Registered: ‎11-11-2012
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Re: Low - limit cards underrated?


MovingForward_2012 wrote:
I thought part of what goes into your AAOA is oldest OPEN accounts? When ever I close something, like pay off a loan my score goes down slightly but once the replacement is added it goes back up.

It still reports closed but it isn't open which means management of that account ceased and creditors can no longer get a full picture if it was the oldest account that was closed. My student loans are 14 years old in good standing always, once they are paid off and closed, I will need an open account back there to help my AAOA. Which is my Orchard card. Started at $300 now at $1100 CL for all eternity. I don't think I will ever close it but we'll see. :smileyhappy:

No, AAoA is on all accounts in the credit report.   Paying off loans might impact another part of the FICO, such as loan mix, which is why the score could go down.

 

As I posted in another thread, quoting a Product Manager from FICO, the 10 years for closed accounts to continue reporting is a MAXIMUM, the CRAs remove closed accounts 10 years after closure.  However, the lender can purge it from their records at any times, and then it will no longer appear on the credit report

 

http://www.bankrate.com/finance/credit-cards/closing-credit-card-dings-credit-score-2.aspx

 

An account that is open with a good history can stay on forever -- it could stay on for 20 years. The bureaus will automatically remove (a closed account) in 10 years, but that could be removed sooner if that credit card issuer decides to remove it. Once it's closed and paid off, that account then becomes inactive, and it's not uncommon for the credit card issuer after a few years or even sooner to just delete that completely, just purge it from their records

Valued Contributor
bs6054
Posts: 1,673
Registered: ‎11-11-2012
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Re: Low - limit cards underrated?


toppers555 wrote:

Me personally I look at it as cleaning house. My credit has come a long way from where it use to be , and if new credit see the low limit account still being used I don't see any sense in them wanting to offer me higher limits then whatmy current creditors extend.


 

And house cleaning in other sense as well:  less cards to monitor, for unauthorized charge, and changes in terms, such as adding an annual fee.

Regular Contributor
BlueNightStar
Posts: 181
Registered: ‎07-09-2011
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Re: Low - limit cards underrated?


bs6054 wrote:

No, AAoA is on all accounts in the credit report.   Paying off loans might impact another part of the FICO, such as loan mix, which is why the score could go down.

 

As I posted in another thread, quoting a Product Manager from FICO, the 10 years for closed accounts to continue reporting is a MAXIMUM, the CRAs remove closed accounts 10 years after closure.  However, the lender can purge it from their records at any times, and then it will no longer appear on the credit report

 

http://www.bankrate.com/finance/credit-cards/closing-credit-card-dings-credit-score-2.aspx

 

An account that is open with a good history can stay on forever -- it could stay on for 20 years. The bureaus will automatically remove (a closed account) in 10 years, but that could be removed sooner if that credit card issuer decides to remove it. Once it's closed and paid off, that account then becomes inactive, and it's not uncommon for the credit card issuer after a few years or even sooner to just delete that completely, just purge it from their records


I can add anecdotal evidence and report that other than an old auto load reporting for 10 years on EX all of my closed CC accounts (and the same auto loan on EQ and TU) dropped much sooner than the normally quoted 10 years. The longest reporting I've had for a closed CC is 5 years.  I do take this into consideration when deciding whether or not to close accounts.

 

Also, just because FICO considers all accounts in calculating AAOA, I tend to believe that some (if not most) lenders have their own internal scoring algorithms and may weigh AAOA of open accounts higher. Similar to Chase discarding store CCs in their own algorithm. I try to keep in mind when making decisions about my credit that there is a lot more to credit management than just the FICO score.

 

Senior Contributor
Walt_K
Posts: 3,065
Registered: ‎11-02-2009
0

Re: Low - limit cards underrated?


bs6054 wrote:

MovingForward_2012 wrote:
I thought part of what goes into your AAOA is oldest OPEN accounts? When ever I close something, like pay off a loan my score goes down slightly but once the replacement is added it goes back up.

It still reports closed but it isn't open which means management of that account ceased and creditors can no longer get a full picture if it was the oldest account that was closed. My student loans are 14 years old in good standing always, once they are paid off and closed, I will need an open account back there to help my AAOA. Which is my Orchard card. Started at $300 now at $1100 CL for all eternity. I don't think I will ever close it but we'll see. :smileyhappy:

No, AAoA is on all accounts in the credit report.   Paying off loans might impact another part of the FICO, such as loan mix, which is why the score could go down.

 

As I posted in another thread, quoting a Product Manager from FICO, the 10 years for closed accounts to continue reporting is a MAXIMUM, the CRAs remove closed accounts 10 years after closure.  However, the lender can purge it from their records at any times, and then it will no longer appear on the credit report

 

http://www.bankrate.com/finance/credit-cards/closing-credit-card-dings-credit-score-2.aspx

 

An account that is open with a good history can stay on forever -- it could stay on for 20 years. The bureaus will automatically remove (a closed account) in 10 years, but that could be removed sooner if that credit card issuer decides to remove it. Once it's closed and paid off, that account then becomes inactive, and it's not uncommon for the credit card issuer after a few years or even sooner to just delete that completely, just purge it from their records


It's neither a minimum or a maximum.  Generally accounts will report for 10 years after closure.  Just as they can fall off earlier, there are also accounts of them reporting much longer.  It's just a general rule of thumb. 


Starting Score: ~500 (12/01/2008)
Current Score: EQ 681 (04/05/13); TU 98 728 (01/06/12), TU 08? 760 (provided by Barclay 1/2/14), TU 04 728 (lender pull 01/12/12); EX 742 (lender pull 01/12/12)
Goal Score: 720


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scenery_guy
Posts: 936
Registered: ‎07-24-2012
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Re: Low - limit cards underrated?

If all of this info is correct (and no doubt it is :smileyhappy:) then I would rather NOT have a 10 year old ACTIVE card with a $500 limit in my file surrounded by much better cards. Might make my AAoA shorter but at least it's filled with great cards with great limits. If it's ever a reason for decline I'll recon them and point it out. I seriously doubt a ten year old sub prime card reporting a zero balance will sway (whatever the flavor card of the year is) to my favor...

I dumped my low limit cards just last month, one at $500 and one at $1,200 when I got the Sapphire Preferred. They were both Chase cards as well but they served the purpose a long time ago. Even the prson that answered the recon call agreed that they were not needed anymore. 

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HiLine
Posts: 3,176
Registered: ‎10-19-2012
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Re: Low - limit cards underrated?


toppers555 wrote:

Me personally I look at it as cleaning house. My credit has come a long way from where it use to be , and if new credit see the low limit account still being used I don't see any sense in them wanting to offer me higher limits then whatmy current creditors extend.


Well, if you see a credit applicant with a 3-year-old 300-limit card and a one-year-old 20,000-limit card, would you really grant a limit of 300 or lower to the applicant using the above reasoning?


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