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CreditNoob80
Posts: 1
Registered: ‎08-15-2012
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Basic questions: unused credit cards, old bank accounts, and more! (searched already)

[ Edited ]

Hi all,

 

I'm planning on getting a mortgage sometime in the next 1-2 years, and wanted to take a look through my credit history to see what I could do to optimize it.

 

My "fako" score was a 790, which is obviously good, but there were a few low scores.

 

According to Equifax, I currently have only 5 open credit card accounts.  They are:

- A visa from 2005 (~7 years old) - open and active - my earliest card

- (3) department store accounts that I never use from 2007, 2007, and 2008

- One recently opened card from last year (2011) that I used for travel.

 

With that info, I was dinged on 2 factors:

1.  Only 5 accounts open (they suggested 8+ I think).  My guess is this doesn't matter much?

2.  Average card age was only around 4 years.  With only 5 cards, the 1-year old card weighted the average age down a lot.

 

I don't have any non-payment issues/etc, and my utilization is very low (2-3%).

 

Specific questions:

 

1.  I plan on closing the 2011 card to avoid an annual fee.  However, I have the option of downgrading it from the Chase Sapphire Preferred to a regular Chase Sapphire.  I don't need that card at all.  Since it's only 1 year old, it seems like I'd be better off just killing it right?  (Rather than "aging" it).  

 

2.  That said, I need to open a new rewards card, which will be "0 years" old.  Ugh.  Really wish I had some cards older than 7 years to help with this.  Is a credit history with max age of 7 years and average age of 4 years ok?

 

3.  I never use the department store cards either, but it looks like I'm best off just keeping them open to keep the average credit age growing.  

 

4.  Do cards automatically close after a certain amount of time?  I have a bunch of old CC's that I stopped using that no longer show up as active accounts in equifax.  If needed I can put a small purchase on these cards this year just to keep them alive.

 

5.  I have some old bank accounts that I never use.  From a quick googling, it seems these do not affect credit score.  Close with no worries?

 

6.  Random question - how much does the "different types of credit" matter to a report?  I've never had a car payment or mortgage, only credit card payments.  Will this affect my mortgage rate in the future, or will having a super clean credit-card only history be fine?  (Even 0.1% difference on a mortgage payment is a LOT of money, so I would consider taking out a small installment loan if necessary).

 

Thanks, and sorry for all the questions!

Moderator
pizzadude
Posts: 9,674
Registered: ‎01-28-2010
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Re: Basic questions: unused credit cards, old bank accounts, and more! (searched already)

[ Edited ]

 

Welcome to the forums !

 

I would recommend pulling a FICO score to know where you really stand.    The score you pulled from Equifax is a FAKO score and you should ignore it and also ignore the scoring advice that came with it.

 

5 revolving accounts is more than adequate ~ you don't need to open any other accounts.

 

Your AAoA from the Equifax site may not be the same as your FICO AAoA, which includes all accounts, both closed and open.

 

Sometimes creditors will close accounts due to inactivity, so I'd recommend making a small purchase periodically to keep them open.

 

Bank accounts will not impact your FICO score in any way or appear on your credit reports, unless you overdraft them and they end up in collections.

 

Don't worry about not having an installment loan for now ~ eventually you'll get one or several of them no doubt.   It will help your mix of credit but I wouldn't borrow money unless you need to.     Getting your first mortgage shouldn't be difficult, assuming that your FICO scores are all good, and your credit reports clean.

 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Valued Contributor
AndySoCal
Posts: 1,949
Registered: ‎04-07-2009
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Re: Basic questions: unused credit cards, old bank accounts, and more! (searched already)

Regarding question one see if Chase will product change it to Chase Sapphire or another Chase card you like better.. I would not close it On question six if it were me I would  close the old bank accounts and put the money on one place less to keep track of.

Equifax My FICO score 815 5/28/2012, 818 on 7/28/2014 . Average of Accounts 12 years and no Installment accounts. MyFICO TU 810 6/26/2012 809 4/21/2013 MyFICO XPN -805. 2/26/2014 Discover TU FICO 813 App free since 9/2011
New Visitor
CreditNoob80b
Posts: 2
Registered: ‎08-16-2012
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Re: Basic questions: unused credit cards, old bank accounts, and more! (searched already)

[ Edited ]

Andy,

 

What's the advantage of keeping that card open?  I need to get a new rewards card anyway, so I'll run you through the scenarios:

 

The way I figure it:

 

Option 1:  Cancel the card


Card ages:  2005, 2007, 2007, 2008 + new rewards card 2012. 

7+5+5+4+0 / 5 = 4.2 years average card age

 

Option 2:  Keep the card


Card ages:  2005, 2007, 2007, 2008 + 2011 (chase card) + 2012 (new rewards card)

7+5+5+4+1+0 / 6 = 3.7 years average card age

 

(Obviously any card < my current average of around 4.4 years will drag down the average.

 

Also, what's everyone's favorite way to get a free real FICO score?

Regular Contributor
apandabear
Posts: 200
Registered: ‎03-15-2012
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Re: Basic questions: unused credit cards, old bank accounts, and more! (searched already)

True FICO scores count open and closed accounts in your AAoA. So by closing it, you won't actually change anything in your average ages.

 

And the preferred way to get your EQ and TU FICO scores is here at myfico.com. 

 

There are several different products. I subscribe to ScoreWatch, which gives you 2 EQ credit reports (and brings the cost of additional reports from $20 to $14), and monitors your reports and scores for changes.

2009-10 - C/Os
2011 - Debts paid, no open credit
2012 - Rebuilding started, secured cards opened, SL rehabbed - EQ myFICO 636
2014 - 10k Discover, 3.5k Freedom, AmEx Green, SL, Auto Loan - EQ myFICO 695
New Visitor
CreditNoob80b
Posts: 2
Registered: ‎08-16-2012
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Re: Basic questions: unused credit cards, old bank accounts, and more! (searched already)

[ Edited ]

Thanks.  I guess there's no harm in leaving it open then.

 

Since FICO also takes into account closed accounts, there's no reason to make a few small purchases on the department store cards that I never use to keep them open then, right?  (Macy's, Kohls, etc)

Regular Contributor
apandabear
Posts: 200
Registered: ‎03-15-2012
0

Re: Basic questions: unused credit cards, old bank accounts, and more! (searched already)

Well, the longer you put off an account's closure, the longer it will remain on your report. In the short-term, no it doesn't make any difference to AAoA.

If those store cards are closed, it could affect your utilization if you carry a balance. 

Let's pretend the cards close in September. 10 years from September, they would fall off your report, and no longer play into your AAoA.

If they aren't closed for another year, you'll have 11 years with those accounts. 

 

So it all depends on what you have open now, and the age over time. 

 

If they are cards to stores you visit, and you need stuff from those stores, I see no reason to just let them close. But unless utilization is a factor, it really doesn't make a whole lot of difference in the short term.

2009-10 - C/Os
2011 - Debts paid, no open credit
2012 - Rebuilding started, secured cards opened, SL rehabbed - EQ myFICO 636
2014 - 10k Discover, 3.5k Freedom, AmEx Green, SL, Auto Loan - EQ myFICO 695
Valued Contributor
AndySoCal
Posts: 1,949
Registered: ‎04-07-2009
0

Re: Basic questions: unused credit cards, old bank accounts, and more! (searched already)

For option 1  If you are able to product change the card another Chase card that has the rewards program you like there are acouple benefits . One no inquiry on your credit.You can continue to use your exsisting account getting the rewards you like. Secondly your average of accounts would not be affected.   If you do decide to close the acocunt take some time and pick a rewards you like and will use for years to come.  Also on the dpartment store cards use them once in a while does not have to be a big purchase. One to keep the active secondly if thye have not been used in the last six months they may not be fully factoring into your FICO score.

Equifax My FICO score 815 5/28/2012, 818 on 7/28/2014 . Average of Accounts 12 years and no Installment accounts. MyFICO TU 810 6/26/2012 809 4/21/2013 MyFICO XPN -805. 2/26/2014 Discover TU FICO 813 App free since 9/2011
Valued Contributor
GregB
Posts: 1,669
Registered: ‎05-24-2007
0

Re: Basic questions: unused credit cards, old bank accounts, and more! (searched already)


CreditNoob80 wrote:

Hi all,

 

I'm planning on getting a mortgage sometime in the next 1-2 years, and wanted to take a look through my credit history to see what I could do to optimize it.

 

My "fako" score was a 790, which is obviously good, but there were a few low scores.

Not necessarily, there are lots of different FAKO scores, some don't hit "good" until 800+ and "Excellent" until 900. The information on the accounts is valid but none of the FAKO scores or advice mean much and are very misleading.

 

According to Equifax, I currently have only 5 open credit card accounts.  They are:

- A visa from 2005 (~7 years old) - open and active - my earliest card

- (3) department store accounts that I never use from 2007, 2007, and 2008

- One recently opened card from last year (2011) that I used for travel.

 

With that info, I was dinged on 2 factors:

1.  Only 5 accounts open (they suggested 8+ I think).  My guess is this doesn't matter much?

2.  Average card age was only around 4 years.  With only 5 cards, the 1-year old card weighted the average age down a lot.

Dinged by horrible advice on a FAKO report that may be correct but could be inaccurate or completely wrong

 

I don't have any non-payment issues/etc, and my utilization is very low (2-3%).

 

Specific questions:

 

1.  I plan on closing the 2011 card to avoid an annual fee.  However, I have the option of downgrading it from the Chase Sapphire Preferred to a regular Chase Sapphire.  I don't need that card at all.  Since it's only 1 year old, it seems like I'd be better off just killing it right?  (Rather than "aging" it).  

 

NO, NO, NO

 

2.  That said, I need to open a new rewards card, which will be "0 years" old.  Ugh.  Really wish I had some cards older than 7 years to help with this.  Is a credit history with max age of 7 years and average age of 4 years ok?

 

NO, NO, NO, You probably don't want any more new accounts if you are looking for a mortgage

 

3.  I never use the department store cards either, but it looks like I'm best off just keeping them open to keep the average credit age growing.  

 

Possibly need some use to avoid them closing them on you.

 

4.  Do cards automatically close after a certain amount of time?  I have a bunch of old CC's that I stopped using that no longer show up as active accounts in equifax.  If needed I can put a small purchase on these cards this year just to keep them alive.

 

Do they show as closed? If so, they are "done".

 

5.  I have some old bank accounts that I never use.  From a quick googling, it seems these do not affect credit score.  Close with no worries? Yes

 

6.  Random question - how much does the "different types of credit" matter to a report?  I've never had a car payment or mortgage, only credit card payments.  Will this affect my mortgage rate in the future, or will having a super clean credit-card only history be fine?  (Even 0.1% difference on a mortgage payment is a LOT of money, so I would consider taking out a small installment loan if necessary).

 

Might have helped at one point but probably too close to a mortgage to be advatageous at this point.

 

Thanks, and sorry for all the questions!


Responses in red above. Also you said a 7 year old account is your oldest card. That isn't old at all. Are the "old" CCs reference above older than that?

 


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