rifleman wrote:
I apologize is this is straying from the topic, but once a card is Paid off and you choose to close it, how will that effect your score? Lets assume that utilization is not an issue. I have heard that Average Age weighs both open and closed accounts equally. If this is true, can I expect my score to stay the same if I close my oldest card?
Emotions can sometimes run high with CCs and debt, and the desire to close a CC "to show 'em" can be strong. As such, it's good to touch on this here.
On your question, assuming util isn't a factor, I believe closing an old CC will impact average age as I believe that only counts TLs which are open.
It's never a good idea to close a CC unless it's costing one money in annual or monthly fees. If a CC is costing one money, then that's something to attack in the negotiations with the CCC. Some CCC will waive an annual fee if you call up and complain every year. If that's the best I can do, then I'll probably settle for it. It's a toll free number, so it's their dime. Nothing fancy.
Hi, I see that my credit card is about to incur the annual fee. But you see, my other credit cards don't charge me an annual fee, and I'm hoping you can update my account so that it doesn't incur an annual fee. My payment history on this card has been excellent, as I'm sure you can see.
If that doesn't work, politely escalate to a supervisor. Always better to get the annual fee removed from the account altogether, but if complaining gets it removed each year, I can accept that.
Sometimes the CCCs can be obstinate about their fees and force you to open a new CC instead. HSBC has been reported to behave in this manner. If the CC with the fee isn't very old, then closing the fee CC and opening a fee-free CC is probably a good trade-off. Years from now, who will care whether your CC acount is 18 years old or 20 years old? This is why it's a good idea to beat on your CCs with fees every time the fees come due.
If you've slain the fees, then sock drawer the unused CCs. "Freeze" them if you don't trust yourself by sticking them in an empty, rinsen out frozen juice can, fill it with water, and stick it in the freezer.
When applying for a prime mortgage, some lenders will hold a lot of unused credit against you. 10-15 CCs with $150K in CL might be viewed as a liability the mortgage lender doesn't want you to have. They might tell you to close some CCs, and don't take offense if you're locking in the best possible 15, 22, or 30 year rate.
Better to have a great mortgage rate and a few CCs trying to add back a few more no fee, low interest CCs. That's an easy game to win.
Before closing CCs, call up the CCC and talk with them. Tell 'em your lender is requiring you to close some CCs, and you want to know whether they'd be willing to re-open the account in 60-90 days while retaining all your good credit history and age once the loan closes. If they will, great. If not, ask 'em whether they could give you a CLI and APR reduction to make this CC more attractive so you could keep it and close some other CC.
When you're deciding to close CCs, do so in a coldly, calculated manner. Don't use it as a threat against the CCCs because invariably you will do it wrong. Always negotiate with them under the premise that you're going to stick with 'em.
Close CCs that are costing you fees when you cannot get rid of the fees.
Close CCs when a prime lender demands it, and pick those with the highest fees first. Once the fee CCs are gone, close those you're least likely to use or which have the least chance of getting re-opened. There may also be CCs where you have some "baggage" because of a past dispute. Even if the dispute was resolved, that venom might remain and it might be time to say goodbye to CCCs with whom you've been at odds in the past.
). I hope to continue this way, but if an emergency happens, or if the internet goes down, or if I am stuck somewhere, and I HAVE to carry over a balance, I want the lowest interest rate possible.
