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Do creditors also look at “credit discarding “ behavior?

designated_knitter
Established Contributor

Do creditors also look at “credit discarding “ behavior?

So here's a question for you all...

 

Obviously, creditors don't like to see credit seeking behavior and it will often trigger AA.

 

But what about "credit-discarding" behavior (just made that up!)

 

For example, after I was shut down from Cap1, I frantically started trying to replace those credit lines to replace the available credit that was lost. 

In some cases, I wasn't proud and went for several sub-prime cards.  Even as recently as last fall, I acquired a credit1 card and an Avant card (which had a whopping 300.00 limit). I also had gotten a Mission lane card earlier in the year because "they said yes". That one had a whopping 400 dollar limit.

 

Since then, I was able to get in with Navy, get an Amazon Store card, my US Bank cards just graduated and I got a big(for me) CLI on my comenity Sony card.

 

today I went ahead and canceled Mission Lane and Avant (even though Avant had only had 2 cycles cut.  Just didn't feel like keeping it open and having one more card to worry about in terms of keeping track of utilization, payment dates, etc.

 

So would my other creditors view the closures as some good, bad, or indifferent?  Would they even notice?  No impact to my overall utilization or AAoA etc.

Started Over Again after Cap1 Death Penalty:
06/15/2019:
03/02/2021:
04/06/2021:
Lesson Learned: DON'T POKE THE BEAR!!! THE BEAR WILL WIN!!!
Message 1 of 11
10 REPLIES 10
Aim_High
Senior Contributor

Re: Do creditors also look at “credit discarding “ behavior?

Generally speaking, closing cards that are antiquated and unuseful to you should be fine.   The most important factor to consider is if you are carrying balances, what will closing credit limits do to your overall utilization?  It doesn't sound like this is a problem for you.  Second would be to consider the age of accounts and not closing an account that is much older than anything else you've got until you've got another relatively aged account to fill in.   Probably best to slowly close cards in many cases instead of doing it all at once. 



Length of Credit > 35 years; Total Credit Limits > $500K
AoOA > 27 years (Jun 1993); AoYA (Aug 2020); Gardening since 08/15/20.
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Message 2 of 11
coldfusion
Community Leader
Super Contributor

Re: Do creditors also look at “credit discarding “ behavior?

The only real caveat is that you want to think twice about closing a card you've held less than a year if you have any reasonable expectation of wanting to open additional cards with that specific issuer in the future.

 

In theory it's possible that if you have a pattern of doing this an underwriter from a different issuer could factor that into their decision as part of a manual review, but that's a totally speculative statement.



(4/2021)
FICO 8 (EX) 815 (TU) 822 (EQ) 808
FICO 9 (EX) 827 (TU) 826 (EQ) 832

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Artist formerly known as the_old_curmudgeon who was formerly known as coldfusion
Message 3 of 11
longtimelurker
Mega Contributor

Re: Do creditors also look at “credit discarding “ behavior?


@coldfusion wrote:

The only real caveat is that you want to think twice about closing a card you've held less than a year if you have any reasonable expectation of wanting to open additional cards with that specific issuer in the future.

 

In theory it's possible that if you have a pattern of doing this an underwriter from a different issuer could factor that into their decision as part of a manual review, but that's a totally speculative statement.


Right.   Aggressive credit seeking is an known risk factor, presumably because most people doing it (outside credit card forums) are indeed desperately seeking credit to stop from going under.   Discarding credit has no such negative associations, but probably also has no positive ones, since it's less seen.   Thus it would all come down to imagining what an underwriter might think, which could vary from:

a) oh good, this person clearly has credit under control and asks for just what is needed

b) Mmm, seems to close cards a lot.   Maybe they would close ours  after a little while if I give it, better not!

c) Total flake, getting and closing cards all the time.   Deny!

Message 4 of 11
pinkandgrey
Community Leader
Senior Contributor

Re: Do creditors also look at “credit discarding “ behavior?

As others have said, it's probably not the problem that credit-seeking is, but I imagine there has to be SOME hesitation on the part of underwriters upon seeing excessive closures. They might see you as a churner for one thing. 

 

But, to be honest, I've closed a TON of cards and never seen that as a negative factor/reason. 

Discover It: 19.7k
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Apple Card: 1.5k
Message 5 of 11
Saeren
Mega Contributor

Re: Do creditors also look at “credit discarding “ behavior?

I would be cautious about closing too many at once since there is no reason code for why an account was closed. The statement will say like closed by consumer, closed by grantor, etc., but that would be part of a manual review, not an automated one. 





Message 6 of 11
ImTheDevil
Community Leader
Super Contributor

Re: Do creditors also look at “credit discarding “ behavior?

^^^ agreed, although in OP's case there may be less risk with this. As an example, an Amex underwriter looking and seeing a slew of cards such as Mission Lane, Credit One, Surge, et al, probably wouldn't sweat it, as they'd recognize the person has improved their portfolio to a point that Amex is achievable, and has thus outgrown the starter cards at that point.

 

That being said, closing several at once is probably not as wise as closing one every month or two.



Platinum NPSL | Rose Gold NPSL | BCP | Delta Gold | Hilton Surpass | Hilton Honors | FNBO Prime Visa | PenFed PCR | Navy cashRewards | Navy Platinum | Apple | IT Cash | IT Chrome | GHSFCU Visa Plat | Quicksilver | Target | VS | Home Depot | Lowes | Sams MC | Firestone | Overstock | Kohl’s | Key Bank auto loan (2017 Audi A6 Premium Plus S-Line)





Message 7 of 11
Saeren
Mega Contributor

Re: Do creditors also look at “credit discarding “ behavior?


@ImTheDevil wrote:

^^^ agreed, although in OP's case there may be less risk with this. As an example, an Amex underwriter looking and seeing a slew of cards such as Mission Lane, Credit One, Surge, et al, probably wouldn't sweat it, as they'd recognize the person has improved their portfolio to a point that Amex is achievable, and has thus outgrown the starter cards at that point.

 

That being said, closing several at once is probably not as wise as closing one every month or two.


Right that's what I'm saying though. Manual reviews are one thing, algorithms making choices could be a very different story. 





Message 8 of 11
designated_knitter
Established Contributor

Re: Do creditors also look at “credit discarding “ behavior?


@ImTheDevil wrote:

^^^ agreed, although in OP's case there may be less risk with this. As an example, an Amex underwriter looking and seeing a slew of cards such as Mission Lane, Credit One, Surge, et al, probably wouldn't sweat it, as they'd recognize the person has improved their portfolio to a point that Amex is achievable, and has thus outgrown the starter cards at that point.

 

That being said, closing several at once is probably not as wise as closing one every month or two.


Hopefully, this would be mitigated by gardening.  I did close 3 today (out of 15!  :-O )

 

But I also don't plan to apply for anything new for the next 18 months (with the possible exception of adding an unsecured Navy card to the collection) ... so that will allow everything else to age and the only things that remain will be prime cards (with the exception of my Citi secured which I have put on "probation").

 

We'll see what happens but my scores are the highest that they've been in over a decade and especially the last 5 years since I've actually been tracking them and actively working on improving them.

 

Thanks everyone, for an interesting discussion.

 

I may have screwed up slightly today because I closed on of 2 of my oldest cards:  Sams Club credit.  Synchrony had balance chased me down to a limit of 230 dollars several years ago... no matter what, and despite having improved my scores significantly, they still never gave me a CLI.  I don't really shop at sams or Walmart so again, one less thing to worry about. 

Started Over Again after Cap1 Death Penalty:
06/15/2019:
03/02/2021:
04/06/2021:
Lesson Learned: DON'T POKE THE BEAR!!! THE BEAR WILL WIN!!!
Message 9 of 11
kdm31091
Super Contributor

Re: Do creditors also look at “credit discarding “ behavior?

I think you are generally fine to close accounts when you want. It is definitely not a risk factor the same way that excessive openings or inquiries are. I would not stress about closing accounts you no longer want, with the usual caveats of utilization changes, etc.

 

Yes, on a manual review, there's the chance you could be looked at as "churning" if you closed multiple cards at once but manual reviews are becoming a thing of the past anyway. Most banks are relying on automated decisions. 

Message 10 of 11
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