Should I Close Credit Card Accounts with Small CL for Better Offers?

[Anonymous]

Over the past few years I have successfully improved my credit history which was decimated by my poor judgment as a young man. My TU FICO is 666 a/o June and EFX is 700 this month. I believe my biggest issue at this point is my UTL. I had two credit cards w/ $500 CL. I called both and they indicated that my account was not eligible for CLI. One eventually bumped the limit by $200. In frustration I opened an AMEX Green (charge) card back in April. I realized the folly too late as no credit limit is reported and is generally substituted for the credit high limit. Since then however my mailbox has been full of pre-screened offers of credit from Discover and Citibank.

I have been debating on opening a card in hopes for a larger limit and closing my HSBC card which has only been open a little more than a year while keeping my Cap One card as it is the oldest open trade to increase UTL.

Since I just opened the AMEX should I leave well enough alone or go through and get a “big boy” card?

[haulingthescoreup]

Hi, welcome to the forums! And congrats on the improvement in your scores AND in your credit usage.

What is your reported util? And do you carry balances, or do you just let your monthly activity post on your balances, and then pay them off?

If you don't carry balances, you can pay them down/ off several days before the statement drops, let it report $0 or a minimal amount, and pay off anything that did report. This can dramatically lower your reported util without changing anything other than paying a couple of days early.

What is your AAoA (average age of accounts)? And when you pull a FICO report (from here, in most cases), what are the negatives listed on screen 2, in order? If it's short history or too many new accounts, you might want to cool your jets for a while.

Also, although rebuilder cards can be annoying, the usual advice is to not close them unless they have an annual fee or other fee that is just insufferable. You don't lose history by closing a card, at least not right away, because they should continue to report for up to 10 years, and they're counted, whether open or closed. But you will lose the CL, tiny as it might be, and if you allow balances to report on your credit reports, that's going to negatively impact (aka, hurt) your reported util.

[nathan]

Discover seems to be less conservative these days. If your eq or tu is derog free, give them a shot. Welcome to the forum.

[tengtengvn]

If both credit cards that you already have don't have AF, no need to close them. I think you should app for Discover Card. It will help your credit mix and eventually, the Discover Card will grow to a high limit.

[Anonymous]

My last reported UTIL was 19% but usually between 43-48% I pay everything off monthly so I will start paying before statements are generated.

My AAoA is 3 years. Understanding Your FICO® Score lists: 1.) You have a public record on your credit report AND 2.) You have a short credit history. The Public Record has been PIF/discharged but not updated with the CRA's.

Both rebuilder card have annual fees. I have come to grips with HSBC's as they offer 2% Cash Back which usually covers the fee and then some. Cap One offers nothing but in the past I have called and requested to close the account because of the annual fee and they have usually credited the amount back to my account.

So should I just try as you suggest and pay before statement close and leave all else as is or see if I can get a card with a higher CL?

[haulingthescoreup]

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@Anonymous wrote:

My last reported UTIL was 19% but usually between 43-48% I pay everything off monthly so I will start paying before statements are generated.

My AAoA is 3 years. Understanding Your FICO® Score lists: 1.) You have a public record on your credit report AND 2.) You have a short credit history. The Public Record has been PIF/discharged but not updated with the CRA's.

Both rebuilder card have annual fees. I have come to grips with HSBC's as they offer 2% Cash Back which usually covers the fee and then some. Cap One offers nothing but in the past I have called and requested to close the account because of the annual fee and they have usually credited the amount back to my account.

So should I just try as you suggest and pay before statement close and leave all else as is or see if I can get a card with a higher CL?

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I'd pay one card in full before the statement date, and pay all but $10 on the other, again before the statement date. HSBC and Orchard bank cards are odd. They don't update the balance that shows on the statement, as do most CC's. They report the balance as of the last business day of the month.

I don't know if you can beat the calendar on this one, but try to pay the HSBC balance in full now, online, and see if they will (grudgingly) credit you as PIF'd by 7/31. Then pay all but $10 of your Cap One bill right before the statement posts. After the statement posts showing a $10 balance, be sure to pay it off, or you'll get a late fee. many of us have gotten a good scare this way.

If all goes well, the HSBC will report $0 and the Cap One will report $0. (Oddly, most of us lose a few points if all cards report $0. That's a story for another thread.) Give enough time for both to update. HSBC generally moseys around to updating by the end of the first week of the month, or the 10th or so. Cap One generally updates on the statement date. Then you have to wait for the credit bureaus to actually post the new info. (Don't get me started.) EX generally updates immediately. Add another week to ten days for EQ and TU to post the new balances. (If you have a credit monitoring service, you can see if and when the new balances show up.)

Also, if you think that the PR will come off your reports, let that happen before you app for anything. You never, ever want to app until you have your reports shined up as best as possible at that time.

Anyway, once you survive all that, and you know (or are reasonably sure) that all the good stuff has posted to your reports, pull your FICO's again. I'll bet that you'll see a nice jump in scores. At that point you can decide if you want to add a card, and if so, what you want to go for.

My advice would be to wait for another 6-7 months, allowing the Green to report 6 months' worth of history, before applying for something else. Citi seems to be in a mailing frenzy these days, but I'm not sure that they're actually issuing good cards as a result. However, Discover is a good card, albeit with a generally low CL. If you're willing to wait for a while, you can apply for a revolving AmEx card (Blue, etc.), that has no fee and does report a CL. Some members here have been burned by AmEx, but many others of us have done well with them, including me.

At any rate, I'd advise letting all the good stuff update, pull your scores, and see where you are then. You'll be much more marketable to the always-fickle CCC's. Good luck!