How do lenders view closing subprime cards?

[omskillet]

Hey all,

I've read extensively about closing credit cards and the one piece of info that seems missing from me is how a lender reviewing my CR would view me closing my subprime cards less than a year after obtaining them?

Right now I have 2 subprime

HSBC - 300 limit ( 8 months of history )

CreditOne - 400 limit ( 6 moths of history )

I've recently been approved for

Chase Freedom - 1500

Discover More - 2000

My plan is to pay off the small balance on these subprimes and close them properly over the next 2 months. That being said...lets say I want to apply for a new card in 6 months. How is a potential lender going to view the closing of those subprime cards? In that case I wouldn't have a single card with a years worth of history. I have 0 lates on either of the subprimes so the history that I would have is clean.

I guess my question is...if a credit analyst at say Amex or Insert Big Bank here or even if Chase were doing a AR were looking at this would they see..."Oh they are swapping out their subprimes" or would they say..."This person doesn't have a very long credit card history they are closing cards as fast as they get new ones".

The reason I want to close these subprime cards is the obvious annual fees and other nonsense that comes with them; low limits and ugly card design...( yes I care about card design ). I'm fine with the decrease in available credit and I plan to do this with 0 balances across all cards to the util is at 0% when I close them. 

Any advice would be greatly appreciated...thanks!

[john398]

I would close credit one ASAP that one is just so bad with fees and all

[namvet]

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@omskillet wrote:

Hey all,

I've read extensively about closing credit cards and the one piece of info that seems missing from me is how a lender reviewing my CR would view me closing my subprime cards less than a year after obtaining them?

Right now I have 2 subprime

HSBC - 300 limit ( 8 months of history )

CreditOne - 400 limit ( 6 moths of history )

I've recently been approved for

Chase Freedom - 1500

Discover More - 2000

My plan is to pay off the small balance on these subprimes and close them properly over the next 2 months. That being said...lets say I want to apply for a new card in 6 months. How is a potential lender going to view the closing of those subprime cards? In that case I wouldn't have a single card with a years worth of history. I have 0 lates on either of the subprimes so the history that I would have is clean.

I guess my question is...if a credit analyst at say Amex or Insert Big Bank here or even if Chase were doing a AR were looking at this would they see..."Oh they are swapping out their subprimes" or would they say..."This person doesn't have a very long credit card history they are closing cards as fast as they get new ones".

The reason I want to close these subprime cards is the obvious annual fees and other nonsense that comes with them; low limits and ugly card design...( yes I care about card design ). I'm fine with the decrease in available credit and I plan to do this with 0 balances across all cards to the util is at 0% when I close them. 

Any advice would be greatly appreciated...thanks!

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   Close them if you want.  If you don't plan on using your sub-prime cards again and you now have better ones no big deal.  Other potential creditors don't give a hoot if you close them.  Almost everyone has had a sub-prime card so it's your call.  Keeping cards that don't grow with you can be a mistake.  Just know when to hold em or fold em.  Your research will give you the answers.

[pizzadude]

I really don't think that creditors care how long cards are open so much as they care about your payment history.   If you have low CL cards with high AFs I would drop them once you are comfortable with your other cards.

[getmycreditright]

I would pay them off and close them both immediately. You haven't had them for long, so your AAoA won't take much of a hit if you close them. Also, I don't think a lender will look at you funny if you close a couple subprime accounts. It's makes financial sense to do so.

[Anonymous]

Computer algorithms don't have human personality traits to try to figure out your intentions.  It's a 1 or a 0 when they analyze available information.

If you get to the point where you have a manual, human review, you are free to plead your case using logic and qualitative rather than purely quantitative values...

[pizzadude]

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@getmycreditright wrote:

I would pay them off and close them both immediately. You haven't had them for long, so your AAoA won't take much of a hit if you close them. Also, I don't think a lender will look at you funny if you close a couple subprime accounts. It's makes financial sense to do so.

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AAoA factors both closed and open accounts, so there is no FICO AAoA ding for closing accounts.   The only time your FICO score would drop when closing accounts is if your utilization increased as a result of losing the CLs or if the percentage of your accounts with balances significantly increased.