@Anonymous wrote:Wasn't really sure what to put as the subject for this...but I have a question regarding my dad's logic:
When I went with him to pick up his truck from Firestone (he got new tires put on) they were offering like $50 off if he opened a credit card for the purchase. He did it and I asked him why he would open a credit card for a single purchase. He said that it looks good to open a card, pay it off, then close the account.
Is there a fallacy in his logic? Obviously this is adding a hard inquiry on your report and lowering your AAoA so I don't see how it would be beneficial.
No it doesn't look good. Some lenders will flip out on you if you open cards, get the bonus and then close them right away. This case is a bit different because its a firestone card, but why wouldn't he just leave the account open and let it age? His AAoAs drop from the new account and he takes the hit on the inq as well. Its doubtful they give him a huge credit line so it won't help for util purposes. If he opened the card and just left it open then over time it will benefit his credit report by building up history and I suppose if he closes it then it will stay on his account for 10 years and it will help some down the line, but the immediate result is a score hit for little benefit.
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@Anonymous wrote:
@Anonymous wrote:Wasn't really sure what to put as the subject for this...but I have a question regarding my dad's logic:
When I went with him to pick up his truck from Firestone (he got new tires put on) they were offering like $50 off if he opened a credit card for the purchase. He did it and I asked him why he would open a credit card for a single purchase. He said that it looks good to open a card, pay it off, then close the account.
Is there a fallacy in his logic? Obviously this is adding a hard inquiry on your report and lowering your AAoA so I don't see how it would be beneficial.
BIG Fallacy.
Your friend can expect a low AAoA if they do this all the time.
+1 Oh doing this on a consistent basis will just destroy his credit because the AAoAs will be kept low. Take a look on the board for "Understanding fico scoring" and it will give you a better idea of how the credit scores are broken down and why this doesn't work.
@Anonymous wrote:
@red259 wrote:
@Anonymous wrote:Wasn't really sure what to put as the subject for this...but I have a question regarding my dad's logic:
When I went with him to pick up his truck from Firestone (he got new tires put on) they were offering like $50 off if he opened a credit card for the purchase. He did it and I asked him why he would open a credit card for a single purchase. He said that it looks good to open a card, pay it off, then close the account.
Is there a fallacy in his logic? Obviously this is adding a hard inquiry on your report and lowering your AAoA so I don't see how it would be beneficial.
No it doesn't look good. Some lenders will flip out on you if you open cards, get the bonus and then close them right away. This case is a bit different because its a firestone card, but why wouldn't he just leave the account open and let it age? His AAoAs drop from the new account and he takes the hit on the inq as well. Its doubtful they give him a huge credit line so it won't help for util purposes. If he opened the card and just left it open then over time it will benefit his credit report by building up history and I suppose if he closes it then it will stay on his account for 10 years and it will help some down the line, but the immediate result is a score hit for little benefit.
Chase really doesn't like that one.
+1 yep they specifically say to us that this is a way to get adverse action.
@Anonymous wrote:thank you everyone! I looked at it the same way, I just wanted some reassurance that I was right lol
What is DD credit score already? I'm guessing it is not bad at all.
Openning an occasional store card to take advantage of the bonus is much different than the typical conversation here on MyFICO where folks want to find the bestest benefits and hunt them all down, nailing the resulting cancelled cards up on the wall in their trophy room.
@NRB525 wrote:
@Anonymous wrote:thank you everyone! I looked at it the same way, I just wanted some reassurance that I was right lol
What is DD credit score already? I'm guessing it is not bad at all.
Openning an occasional store card to take advantage of the bonus is much different than the typical conversation here on MyFICO where folks want to find the bestest benefits and hunt them all down, nailing the resulting cancelled cards up on the wall in their trophy room.
You've been in my trophy room?