Hey, should I dump low limit cards now?

[Anonymous]

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

On my TU and EQ FICO I have:

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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.

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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

[Anonymous]

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.

[Anonymous]

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

[Anonymous]

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.

[Anonymous]

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

[Anonymous]

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.

[Anonymous]

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.

[Anonymous]

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.

[manyquestions]

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

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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. 

[haulingthescoreup]

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?