topic Re: Darn it... in Credit Cards

Darn it...

shorrttyycm1 — Mon, 01 Apr 2013 15:41:04 GMT

Okay, so maybe I'm not a good gardener ;-( Just got approved for Barclays sallie mae rewards card. GREAT rewards program but baby limit of $2500. :-( Hopefully that will grow. Few questions:

1. I want to now close either Orchard (520.) or Merrick (300.) These are both my oldest cards. How My aaoa is 2.5 yrs. How much will this hurt...adding a new account and closing one of my oldest, only one.

2. Will the above actions cause any reactions from my best lender, nfcu?

3. Closing merrick or orchard would leave me with only 2 tradelines over 2 yo. Would that be a prob in a mortgage app in a couple months?

Thanks in advance...any and all advice appreciated !

Re: Darn it...

sarkell — Mon, 01 Apr 2013 15:59:36 GMT

Orchard have you contacted eo they may match highest cl if you have good history mine did cost a hard pull. I'm waiting until transition is complete so I can add rewards or something. Or waiveor refund annual fees.

Re: Darn it...

Anonymous — Mon, 01 Apr 2013 16:09:40 GMT

Closing cards doesn't have an immediate impact on average age of accounts. They continue to report for up to 10 years. However, when closed the credit line is no longer available, so if you have balances on other cards, utilization will increase.

Obviously opening the new account does decrease your average age of accounts, and the inquiry will hit your score, but on the positive side, it increases your overall limits helping utilization.

Too late now but it's a good rule not to apply for new things within 6 months of applying for a mortgage. Just be prepared to explain to an underwriter why you got this card. ("I am drowning in debt and need to get any extra credit I can" would not be a good answer, but "It offers very attractive awards for my needs" might be.)

While I am usually very pro closing cards, in this case I would hold off, the fewer changes to your file before the mortgage app (if it really is two months or so) the better.

Re: Darn it...

shorrttyycm1 — Mon, 01 Apr 2013 16:10:30 GMT

Thnx for the reply. I had contacted the orchard eo but was told that they are not increasing my "type" of card or my card is not eligible for an increase because pf the program my card is under? And Merrick. well they do not accept customer requests. At least orchard is 200. more than merrick but merrick gives free fico. So idk which one should be chopped and how much its gnna hurt my score.

Re: Darn it...

shorrttyycm1 — Mon, 01 Apr 2013 16:16:30 GMT

@Bs6054,
Thnx for advice. Srry, to clarify, mortgage app prob not for 4-6 mnths or so. Currently i have 34,000 across 4 cards with zero balances across the board so my utilization really wouldn't be an issue. I really just wanted to replace an old card with annual fee low cl and no rewards with one that has no annual fee and rewards. It also is a plus that i could redeem my 5% as credits on student loan account. Didn't even REALLY need the card at all...so kicking myself right now!

Re: Darn it...

youngandcreditwrthy — Mon, 01 Apr 2013 16:21:57 GMT

What were your stats? This card has been on my radar for a few weeks!!

Fico? Aaoa? Util? Income?

Re: Darn it...

sarkell — Mon, 01 Apr 2013 16:25:00 GMT

You need to contact c1 eo they will reach out to orchard in my case look for c1 eo on this forum.

Re: Darn it...

shorrttyycm1 — Mon, 01 Apr 2013 16:27:19 GMT

Its a great card rewards wise. My stats are:
Fico: TU 684 EQ 677 Exp (fako) 688
AaoA: 2.5 yrs
Util: 0
Income: $54k

I hope this is helpful...good luck!

Re: Darn it...

shorrttyycm1 — Mon, 01 Apr 2013 16:30:15 GMT

@Sarkell,

I did contact the co eo and they forwarded the request for me. Very nice guy called me shortly after but said because my card is in the program (didn't ask) that they will not increase. He did refund my annual fee one-time only. That's $59.

Re: Darn it...

youngandcreditwrthy — Mon, 01 Apr 2013 16:30:31 GMT

Awesome!! Thanks for the info! Bahhh I have the itch!!!!! :-0

Re: Darn it...

Anonymous — Mon, 01 Apr 2013 16:31:27 GMT

@shorrttyycm1 wrote:
@Anonymous,
Thnx for advice. Srry, to clarify, mortgage app prob not for 4-6 mnths or so. Currently i have 34,000 across 4 cards with zero balances across the board so my utilization really wouldn't be an issue. I really just wanted to replace an old card with annual fee low cl and no rewards with one that has no annual fee and rewards. It also is a plus that i could redeem my 5% as credits on student loan account. Didn't even REALLY need the card at all...so kicking myself right now!

Don't be too concerned, single inquiries don't ding the score much, and certainly in six months much of the impact will have gone.

Re: Darn it...

09Lexie — Mon, 01 Apr 2013 16:32:24 GMT

Really young?! No, stop it!

Re: Darn it...

shorrttyycm1 — Mon, 01 Apr 2013 16:32:29 GMT

Gotta watch out for that itch...usually followed by regret ;-)

However, 5% back is nice too!

Re: Darn it...

shorrttyycm1 — Mon, 01 Apr 2013 16:37:09 GMT

How long do new accounts hurt your score? So not looking forward to the fall out :-(

Anyone know if NFCU is sensitive to opening new accounts?

Re: Darn it...

Anonymous — Mon, 01 Apr 2013 16:43:42 GMT

Inquiries for new accounts stay on your record for two years, and are calculated in FICO for one year (with diminishing impact). Some banks look back less.

Now the inquiry might be on only one of your reports, so some lenders may not see it, depending which report they pull. (For mortgages, they will pull all three.)

The other impact is the reduction in average age of accounts. The more accounts you have (open and closed) the lower the impact. This doesn't go away (unless you close the account and it ages off) but the impact decreases every month as all your accounts age.

Re: Darn it...

shorrttyycm1 — Mon, 01 Apr 2013 16:51:30 GMT

Thanks bs6054

Wow, they are quick. Already emailed me to set-up account. How fast do Barclays cards grow? Rep said 6 mnths? Is my starting limit low for them? Also, just read that they close your accounts with no warning? What is that about?

Re: Darn it...

Anonymous — Mon, 01 Apr 2013 17:02:18 GMT

A number of us have had very low starting limits on Barclays, a quarter or less than the CLs on other cards. They seem to give an auto-CLI at 6 months on some of the cards, but still low. Calling might help.

They are said to be very new account sensitive and will close your account if you open new ones. I did a poll here recently and this seems really not to be the general case (any more than Amex will FR you if you....) But, if there is something marginal in your record, and you open too many new accounts, Barclays might be the first to react and close your account. But in moderation, it's ok...

Re: Darn it...

shorrttyycm1 — Mon, 01 Apr 2013 17:11:30 GMT

Okay, thanks for the info! I do not plan on opening any more...but then again i didn't plan on opening this one either lol. Currently my plan is the complete opposite, i wanna close my dead weight cards.

Re: Darn it...

Anonymous — Tue, 02 Apr 2013 14:50:19 GMT

I would wait until after you close on the mortgage to close them as most mortgage lenders want to see 3-4 open/active trade lines reporting for 12 months in good standing. So if closing one or both will reduce your open accounts to less than 4, I wouldn't close them.

New accounts opened more than 120 days from applying for a mortgage do not need to be explained. Also, typically a full letter of explanation is not required for new accounts opened less than 120 days from applying for a mortgage. Typically they provide you a list of all of your inquiries with 3-4 lines underneath each one. Usually, all they want you to write in is what the inquiry was for (be very general...just say, for auto loan or for credit card...no need to elaborate about rewards, balance transfer, etc.) and whether or not a new account was obtained.

I was approved for the Chase Freedom a few days before applying for a mortgage. I also got a new car lease 1.5 months from applying for a mortgage and I ran into no issues. The lender did request for me to maintain a zero balance on the Chase Freedom until after closing and they also had to call Chase to get the CL and and balance verified because the new account hadn't posted to my credit report yet.

Opening new accounts close to a mortgage is more of a concern when your score is borderline qualifiable as a inquiry or new account could drop your score out of qualifiable range and if they do a second credit pull right before closing (which many lenders do), you would be denied at the last minute after going through the hellish process.

If you plan to go FHA, the drop in score probably won't affect your interest rate much as a large range of scores are grouped under the same interest rate. If you are going conventional, every point counts towards reducing your interest rate. If you plan to go with FHA, you might want to consider getting on Contract before June 3rd as after this day, PMI is no longer cancelled at 78% LTV. Just yesterday, FHA raised the PMI rate from 1.25% to 1.35%. Now, if you get on Contract by June 3rd to get a FHA Case Number, the case # is good for 6 months. But if you decide to go on Contract for a different house after June 3rd, a new FHA Case # will be assigned, which means you are no longer grandfathered and will have to pay PMI for the life of the loan. The mortgage forum has a lot of good info about the changes to FHA loans as a sticky at the top if you are interested in knowing more. My PMI is $346 a month so depending on the home price, the cost may not be trivial. Based on paying just the required amount on the mortgage, my PMI won't be cancelled for about 11 years but that is much better than paying it for 30 years!

Re: Darn it...

a3quit4s — Tue, 02 Apr 2013 15:08:26 GMT

The 5% is good but if you read the fine print on the reward system you only get 5% on the first $250 you spend on GAS AND GROCERIES together after that it's 1%