topic Re: Hey, should I dump low limit cards now? in Credit Cards

Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 15:11:40 GMT

This is a question of FICO vs. VANTAGE, sorta.

On my TU and EQ FICO I have:

What’s hurting your FICO® score

Because your FICO® score is exceptionally high, there are no actionable negative factors present with your score. Continue to manage your credit as you currently are doing to maintain your very high FICO® score.

However, on my VANTAGE (yes, I know FAKO, but the "comment" they provide is worth considering:

1.The available credit on your open revolving credit accounts is too low:

Having credit available to you is a sign that you are able to manage your finances

responsibly. Lenders usually like to see that consumers have a large amount of credit

available to them.

I don't have balances, but I have an HSBC (Orchard) $750 CL, CapOne $1K and Chase $3.5k remaining from my builder years. Even though they have zero balances (chase actually ranges $30 - $150 as my reporting balance card), Vantage says my "available credit is too low."

I have personal BoA $10k and BoA Bus Card (not on personal credit) of $35k. I had an Amalgamate Bank of Chicago $15k but closed it a year ago because it was a secured card from my builder years and they didn't seem interested in unsecuring once my credit had rebounded and they didn't pay enough interest for me to leave $15k with them, and the account will remain in my AAoA for 10 years from close anyway.

I have now opened this past week Alliant $10k, PenFed $10k, Discover $5k and CapOne Miles Reward Ultra (don't have limit yet....comes with card - hoping $10k or better but don't have any feel for that).

Since the AAoA of the builder cards will remain in my CR for 10 years, should I cancel the builder cards once the new cards report so that Vantage doesn't think my available credit is low?

I think I would keep Chase since the CL isn't as low and see if I can work on a product change and CL down the road, maybe. But I don't see the real benefits of HSBC and CapOne, especially since are not rewards and have AF (well maybe CapOne no AF, but is low limit).

CapOne is actually my oldest builder card at about 4 years. Chase is about 3.5 years. HSBC is 2-3 years.

Anybody think it is a bad idea to kill the builder cards in the next month or two, or at least before AF hits? My logic is that I have "upgraded credit" since I closed a couple accounts in conjunction with opening new accounts. FICO may not fully appreciate it, but VANTAGE would and possibly LO review when looking at content.

Message Edited by txjohn on 03-29-2009 08:11 AM

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 15:10:39 GMT

No!

If you aren't paying a fee don't close them.

Very few lenders use a VantageScore anyway. If that changes it may be something to consider, but until that point I say ignore any of their advice that doesn't coincide with FICO score advice.

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 15:17:22 GMT

Yes, I know that vantage is not highly used. But, loan officer review of content is as important as FICO in many ways. And my Average Age of Accounts will not be impacted by closing the accounts.

HSBC/Orchard has an AF. CapOne might, I don't recall.

I sometimes think that people are TOO afraid to close an account. If I were still building, i would not consider. I have older accounts, such as Macy's going back almost 21 years that keep my oldest account. I won't kill that ever. But I am looking for concrete reasons why LONG TERM these cards would be good to keep. Not interested in the 6 - 12 month FICO factor.

Thanks

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 15:22:40 GMT

I think it is more important to have a card or two with medium to high limits than to worry about having a card or two with lower limits. If the cards have fees and you don't see yourself using them long term by all means cancel them. Lets not pretend that Vantage Score comments = what a manual reviewer will think.

I agree that is someone has 5 300 limit cards and nothing else a manual reviewer might be reluctant to push a large loan your way on the most favorable terms. That said if you had a card or 2 at 10k+ and a few at 1k, I don't think they would bat an eye.

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 15:30:15 GMT

I say close the low limit cards that have a AF an save the one's without a AF.

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 15:37:12 GMT

Myself, I'd close HSBC/Orchard. Then see if I could combine my old Cap One into the new one. Or just keep it open if no AF.

I combined 2 low limit Cap Ones...it's still low limit, but a perfect card to have my young daughter AU on and to let her use in emergencies.

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 15:40:28 GMT

Hmmm, combine capone I wonder if they would merge the two accounts and I could keep the original tradeline open date? Or if I would have to transfer CL old to new?

I guess that would be worth asking them. I just don't want to contaminate my new account. The builder card has no future, won't raise much if at all on CL and I don't want to taint new account in any way. Would rather kill old and burn the carcass to keep it from infecting the new account.

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 15:49:52 GMT

They will let you keep either card open usually, with that cards opening date. But you definitly want to combine the old into the new since your new card is a rewards card. And like you said, you still keep the old cards history for 10 yrs.

Re: Hey, should I dump low limit cards now?

manyquestions — Sun, 29 Mar 2009 16:58:27 GMT

@Anonymous wrote:
I say close the low limit cards that have a AF an save the one's without a AF.

I agree. If it has an annual fee and you have older cards, go ahead and close it. If it does not have an annual fee, keep it, closing it will not help you in any way. Nobody cares what Vantage says about it.

Re: Hey, should I dump low limit cards now?

haulingthescoreup — Sun, 29 Mar 2009 17:09:53 GMT

Just a general comment about the advice from Vantage and others: FAKO scores imply FAKO advice.

It stands to reason that their advice results from however their formula works. If they are somehow marking you down for having low-limit cards, then that comment is going to pop up.

If I got a comment like that on a FICO report, I'd snap to attention. But not on a FAKO.

I did close a $500 card, but mainly because I was tired of keeping so many cards happy, and I decided kind of on a whim that I wanted at least 4-digit limit on all my cards.

That being said, I would dump the fee cards. If a card isn't doing anything for you, and it costs money to keep it, kick it to the curb. The only question is the timing. What is your oldest account now, and is it open or closed? Do you have anything older than the HSBC/ Orchard card?

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 17:35:35 GMT

I was waiting for you to weigh in, Hauling -

my oldest account is open, Macy's 20yrs 5mos. My AAoA prior to recent apps was 5.5yrs.

CapOne is my oldest builder card (those since my 2005 submarine scores). Although my BoA only about 3-4 months less aged and is $10k.

Actually, HSBC/orchard shows it is only 1.5yrs old....I didn't remember doing anything that recent. I guess I was testing waters or something...anyway tested on the wrong card and hadn't come here to bask in the wisdom of the forum wise ones

My real thoughts here are: FICO might not care, but LO might.

Re: Hey, should I dump low limit cards now?

haulingthescoreup — Sun, 29 Mar 2009 17:47:19 GMT

Oh well, shoot then, close them. Your oldest account won't be affected, and I doubt the AAoA will fluctuate much ten years from now. (I'd keep the Chase, as you mentioned. $3500 is perfectly respectable.)

And you know I have to make a FAKO speech when I can!

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 18:25:17 GMT

Regarding the Vantage score FAKO, txjohn indicated the report said:

"1.The available credit on your open revolving credit accounts is too low:

Having credit available to you is a sign that you are able to manage your finances

responsibly. Lenders usually like to see that consumers have a large amount of credit

available to them."

I wrote about this is another post about having $0 balances on everything. I, too received a similar warning, and called Experian on it.

The available credit they refer to doesn't mean as in utilization. They mean it as "you don't have enough credit". I have no clue how they figure this, or what their threshhold is, but however they do it, it's BS. I've got plenty of credit, more than I'll ever use, including high-limit and no-limit cards, so I don't particularly care what a FAKO report says about it.

I'm just sorry I wasted my $5.95 for that FAKO score. (I could've ALMOST bought a pack of cigarettes for that, hehe...see Smorgasboard).

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 18:29:21 GMT

So, technically speaking, Uborrow -

EX help put 30 minutes back onto your life expectancy by killing that pack of cigs!

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 18:38:32 GMT

In fact, I got stressed (short temper with idiots) and smoked twice as much that day as I normally do! Not a good thing to do when you're trying to quit altogether...

Carry on...

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 18:41:45 GMT

Re: Hey, should I dump low limit cards now?

Anonymous — Sun, 29 Mar 2009 22:13:31 GMT

I still say why not combine your old Cap One onto your new Cap One...that gives you the additional $1000 on your new card and closes your old card at the same time. Definitly close the HSBC.