02-26-2008 06:20 PM
02-26-2008 06:31 PM
My TransUnion score recently was 784. I closed out about a dozen of old credit cards that I haven't used in a long time. To my surprise, my score went down to 777. I called TransCredit (an affiliation of TransUnion) and was told that closing out the accounts resulted in the lower score but the score would rise a little later.This all doesn't make sense to me. I was simply trying to protect myself against ID theft and I got penalized for it. Can someone explain how and why the number of credit cards makes a difference in scoring?
02-26-2008 06:41 PM
02-26-2008 06:49 PM
Hi, rll, welcome to the forums! What Timothy was cryptically saying is that when you close credit cards, their credit limits are no longer available to you. So when FICO calculates your util (= utilization, total balances owed on all cards divided by total of credit limits on all cards), the same balances owed are now divided by a smaller figure, so your util goes up, and your score often drops.
If you have any balances reporting to the CRA's (credit bureaus), even if you pay them off as soon as you get your statements, then your util probably rose, and so you lost some points.
Unless CC's have fees, or they just offend you so much that you can't bear to even look at them again, or you have problems keeping on top of what's due when, there is generally no real point in closing them. Check fused's post called Closing Credit Cards:
And as Timothy said, please read Credit Scoring 101 (see his link.) None of this will make any sense at all until you do.
02-27-2008 10:37 AM
02-27-2008 12:11 PM
02-27-2008 12:24 PM
Boscoe wrote:rll - Your scores only dropped 7 points due to not having a big change in UTL......in 10 years when all these closed credit cards drop off your report, you will likely see a worse drop than 7 points.....This is a part of the FICO model that I totally disagree with. A closed account should stay on the report forever, or at least allow one or two to remain on the file for scoring purposes.Or better yet, use the "date file opened" for each CRA as your "oldest age" date. The way they do it now, closing accounts hurts a little now (i.e. lower avail. credit = higher UTL = lower score) and alot later when the oldest and avg. age of accounts drops some or maybe alot when the tradelines fall off the report.FICO should make this change for their next release. But I probably have a better chance of winning the lottery then seeing this in my lifetime.
02-27-2008 02:51 PM - edited 02-27-2008 02:59 PM
02-27-2008 03:05 PM
02-27-2008 03:28 PM
Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.