topic Re: Which way is better? in Credit Cards

Which way is better?

Verde — Thu, 22 May 2008 05:17:20 GMT

My fico score took a big hit when i was using close to 85% of the CL on my 13 cards. Now that i have reduced it to 40% i would like to know: Is it better to keep the percentage low by keeping all my credit cards which means a higher CL or should i close a few accounts and get back to 5 or 6 cards only? (Off course i would keep the older accounts and get ride of the new ones)

Re: Which way is better?

jmbfl — Thu, 22 May 2008 05:42:07 GMT

At 40% UTIL you need CL's.

Re: Which way is better?

RobertEG — Thu, 22 May 2008 06:38:02 GMT

Verde, I will give to you the only absolute truism in FICO scoring. It is NEVER to your advantage, from a FICO perspective, to ever, ever close revolving accounts, period.

When you close a revolv account, you instantly lose its CL against your % util. Closing an account will not close out the full CR history on that account, or delete any existing derogs on the account, so you dont close out prior sins. It merely puts it into an inactive status. Closing just starts a clock ticking, which upon ten years from inactivity, will erase it totally from your CR, and you will then lose alll prior ten year credit history for that account.......... Up until ten years from the date you go inactive on the TL, it will still count in your avg age of accounts, whether open or closed. Only a FICO benefit. No FICO negatives at all.

The ONLY reason to close an active account is to avoid any annual CC fees. But that is a financial, and not a FICO consideration.

Pure and simple, from a FICO perspective, NEVER close an existing CC.

Re: Which way is better?

RobertEG — Thu, 22 May 2008 06:52:35 GMT

And I dont advise more CLI as your first approach. Each CLI request will probably bite you with a hard inq. Getting CLIs in order to increase %util is not necessarily the best path Paying down existing balances is almost always the best route. Harder to suffer, but dat beez life!

Message Edited by RobertEG on 05-21-2008 11:52 PM

Re: Which way is better?

Anonymous — Thu, 22 May 2008 15:11:48 GMT

To partially disagree with RobertEG:

Asking for CLIs can be a quick improvement, though the real gains still come through paydown. The caveat here is that sometimes they'll cost a hard inq., sometimes not- but usually they'll tell you if you ask on the phone. It also depends on what company you're asking- BoA, for example, frequently gives nice CLIs for just a soft, but Home Depot says right there on the website that any CLI request gives them permission to pull a hard inq.

I saw a score jump when my BoA CLI posted, reducing my util on that card as well as overall util. I'm thinking I'll see a much bigger jump when the large payments from tax refund/rebate/bonus checks post...

-MsMS