will closing one card getting a new one hurt my score?

[Anonymous]

I have a Old Navy cc that I haven't used in over a year. How long will it take before they close it due to inactivity? I have had the card for around 3 years. I never use it. I have a limit of $5K on it. I want to get a new credit card with rewards. Will it hurt me a lot on my score to close the ON card and get a new card? My credit scores are in the 750-770.  I really don't want to even have the ON card open anymore. It's just something that I would have to worry about keeping an eye on, making sure they don't charge me for something stupid like inactivity, or an annual fee. I'd rather get rid of it but don't want it to hurt my score too much.

[Jazzzy]

I opened my Old Navy in December '06 (to get an instant discount on Christmas gifts...last time I will ever do that). They closed it in January '09 for nonuse. I don't think I ever used it after that first purchase.

You may want to apply for another credit card while this one is still open. Then, after you get the second card, close the Old Navy if that makes you feel more secure.

[Anonymous]

Thanks Lynette. I think I will do that. I had the original Old Navy store card but then they changed it to a master card. So really I didn't even ask for this master card, they just changed it to a master card. I think I will get the other card and just let the ON card go.

I am looking to get a wells fargo credit card. Does anyone know, does it report to fico? Years ago I had a bank cc and it didn't report. 

[Eliae]

Closing the Old Navy card will lower your overall revolving availability and opening a new card will not only create a new inquiry on your credit report, but will also lower the average age of your accounts.  These things combined could potentially lower your score depending on the other factors listed on your report.

Because of the importance of revolving availability and the utilization ratio, I would personally suggest trying to keep the Old Navy card open.  Go buy something small from there and pay it off in the same day.  Do this every 3 months (approximately) and it will allow the 5k limit to continue applying towards your overall revolving availability (a good thing). 

Getting a new card will not significantly impact your score unless you have already applied for several new cards within the past two years.  At most, you will have a small decrease (sometimes between 3 and 4 points) for the inquiry itself.  I would also suggest taking a look at how the new card would impact your average age of accounts (AAoA).

Look at your credit report and determine the age of each of the revolving accounts listed.  Add them up and divide it by the number of accounts on the report.  Now to see the change to your AAoA, just divide the same overall age of accounts by the number of accounts you have plus one (for the new account you would be gaining).  Is the difference significant?  Do you feel like the benefit you would get from having the new rewards card be sufficient to get you through the next couple of years while the account ages and your AAoA starts to increase again?  If so, I don't think it would be a bad idea to find a new card that will fit your needs.

Best of luck to you, hope this helped.

- Eliae

EDIT: Yes, bank credit cards generally always report.  It might have depended on the report you pulled.  I work as a Credit Analyst for a bank and we use the Experian reports for our underwriting.  I've seen Wells Fargo credit cards listed on reports before.

Message Edited by Eliae on 12-30-2009 11:30 AM

[DI]

Keep the card open and still apply for new credit when needed.

[Jazzzy]

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@Anonymous wrote:
I have a Old Navy cc that I haven't used in over a year. How long will it take before they close it due to inactivity? I have had the card for around 3 years. I never use it. I have a limit of $5K on it. I want to get a new credit card with rewards. Will it hurt me a lot on my score to close the ON card and get a new card? My credit scores are in the 750-770.  I really don't want to even have the ON card open anymore. It's just something that I would have to worry about keeping an eye on, making sure they don't charge me for something stupid like inactivity, or an annual fee. I'd rather get rid of it but don't want it to hurt my score too much.

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This is why I didn't recommend that you keep the account open. It will continue to report for approximately the next 10 years and will not hurt your credit score to close it. It will still count in your history and for the average age of your accounts.

I understand where you are coming from in wanting it gone. A few years ago, I checked my FICO score and saw about a 40 point drop. An inactive credit card had charged an annual fee. I didn't know it, and I didn't pay it until I explored the FICO drop. I was able to call the credit card company, and they were nice enough to remove the late payment from my credit reports. I was very lucky.

No one has to keep a card open forever. If it's important to your peace of mind, it's OK to close it. If you want to keep it open because you feel you may need it for your utilization percentage, then it's OK to keep it open. Either is OK...and neither will hurt you.

I utilize my rewards cards a lot. I earn a lot of cash back and miles, and I don't use those cards that don't offer rewards. I have a Chase right now with a $15k credit limit that I don't use because they offer no rewards. I'm just waiting for them to close it. I charge a book club to it each month and then pay it off to have a bit of activity on it. You do have to monitor each account you keep open, so the decision is a personal one.

[MarineVietVet]

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@Eliae wrote:

Closing the Old Navy card will lower your overall revolving availability and opening a new card will not only create a new inquiry on your credit report, but will also lower the average age of your accounts.  These things combined could potentially lower your score depending on the other factors listed on your report.

Because of the importance of revolving availability and the utilization ratio, I would personally suggest trying to keep the Old Navy card open.  Go buy something small from there and pay it off in the same day.  Do this every 3 months (approximately) and it will allow the 5k limit to continue applying towards your overall revolving availability (a good thing). 

Getting a new card will not significantly impact your score unless you have already applied for several new cards within the past two years.  At most, you will have a small decrease (sometimes between 3 and 4 points) for the inquiry itself.  I would also suggest taking a look at how the new card would impact your average age of accounts (AAoA).

Look at your credit report and determine the age of each of the revolving accounts listed.  Add them up and divide it by the number of accounts on the report.  Now to see the change to your AAoA, just divide the same overall age of accounts by the number of accounts you have plus one (for the new account you would be gaining).  Is the difference significant?  Do you feel like the benefit you would get from having the new rewards card be sufficient to get you through the next couple of years while the account ages and your AAoA starts to increase again?  If so, I don't think it would be a bad idea to find a new card that will fit your needs.

Best of luck to you, hope this helped.

- Eliae

EDIT: Yes, bank credit cards generally always report.  It might have depended on the report you pulled.  I work as a Credit Analyst for a bank and we use the Experian reports for our underwriting.  I've seen Wells Fargo credit cards listed on reports before.

Message Edited by Eliae on 12-30-2009 11:30 AM

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There is one more step needed to get the AAoA.

Your AAoA is the sum of the ages of every account on your report, whether open or closed, calculated in months, divided by the number of accounts and then divided by 12. This is measured from the time each account was opened until present.

You’ll need to figure the age of each account, open or closed, on each report. If all three reports are identical, you're in luck; otherwise, you'll need to run this for each report.

Here’s an example from a post back in March:

1 Mortgage- 6/06-2 years 10 months = 34 months
2 Mortgage- 5/07- 1 year 11 months=23 months
3 CC- 11/97-11 years 5 months 137 months
4 CC- 10/07- 1 year 6 months =18 months
5 CC- 10/07- 1 year 6 months = 18 months
6 CC- 7/08 –0 year 9 months = 9 months
7 CC- 11/96 – 12 years 5 months = 149 months
8 CC- 12/08 – 0 year 4 months = 4 months
9 Auto Loan- 7/08 – 0 year 9 months = 9 months
10 Installment Loan –1/09 - 0 year 3 months = 3 months
11 Crown Jewelers $0 Bal, $2,500 CL, 10/08- TU, EXP – 0 year 6 months = 6 months
12 CLOSED Discover 8/99- TU – 9 years 8 months = 116 months


TU 525/12 accts= 43.75 months/12 = 3.65 years

EXP 409/11 accts=37.18 months/12 = 3.1 years

EQ 403/10 accts=40.03 months/12 = 3.36 years

Let's look at the TU report. The total numbers of months for every account came to 525 months. This was divided by the number of accounts (12) to get 43.75 months. This figure was then divided by 12 to get the AAoA of 3.65 years.