Understanding FICO® Scoring

[Vapchez]

Recently, I bought something from Shopnbc and applied for their credit card to see if I could put the purchase on there with no payments until September.  I was told I was not approved so I did the 6 equal payments from my checkcard instead.  About 2 weeks later I get a Shopnbc card in the mail.  Turns out I was approved but the credit limit wasn't high enough for the purchase I made.  After reading some boards here, I was debating whether to activate the card or not when I got a MyFico alert that my credit score increased to 634 because of Shopnbc reporting the card.  So, I decided to keep it and not charge anything on it.  I just received and was approved for an HSBC card with an interest rate about 10% lower than my oldest card which is with Orchard Bank.   So, my plan is to use the new card to pay off my Orchard Bank card and then only charge and pay in full the Orchard Bank card enough to keep it active.  Will opening two new accounts so close together drop my credit score considerably?  I plan to pay the new card down to below 30% by summer.  Since I don't plan on using the Shopnbc card, is it worthwhile to keep it or should I go ahead and close it? And, how would it affect my score to keep it open for a couple of months and then close it since it would be new with no activity?  Will there ever come a time when I can close the Orchard Bank card altogether and not hurt my credit score since this is my oldest card?  It carries a yearly fee which the new card does not.  I've also asked them repeatedly to lower the interest rate only to have them say that there are no promotions at this time that I can take advantage of.  

[Brammy]

The bad news is that if you've already opened the card, the damage has already been done, closing them will do nothing to help it.  Just keep them open with less than 30% utilization on each and you should see an increase in your score.  The new card may not actually hurt your score as it will lower your utilization.  If the limit is higher than other cardsm this can be a bonus too as low limits actually can hurt your score and chances for approval for other cards.

[Vapchez]

Thanks for the advice Brammy.  One other question.  Will there come a time when I can close the Orchard Bank account?  It carries an annual fee and I'd like to get rid of it after paying it off.

[Vapchez]

And it is my oldest good standing cc account.

[Brammy]

I did have the Household bank credit card, one of the first cards aftr BK.  If you close it it will remain on our report for an indefinite period of time.  However after ten years or so it will drop off.  Depending on when you established additional credit after this yu ay take a small hit when it falls off. But as long as you have good credit reporting it will be negligible.

I have a freind that was ten years between closing an account an reopening a new onw.  In that case when the oldest account fell off it was an 80 point drop.

I do not believe in keep cards with annual fees unless that's all you can get.  They are designed to establish xcredit and when you are approved for better offers, they have done their jobs IMHO