Should I PC, Close CC?

[Anonymous]

Hello all, looking for some coaching from the pros. What say you?

Does it make sense to close the following card or PC?

NFCU Platinum Card will be 3 months old next week. It only has $1000 CL (zero APR deal is over for any new transfers; the reason I got it in the first place, but CL was too low to really use the promo.). My NFCU Cash Rewards has $18,700 CL.

• Should I move the $1K from platinum over to Cash Rewards and then close it but not before I try an CLI? (I believe my AAofA will go up by a few months if I close it.)
• Does closed accounts have any bearing of age of accounts?
• Or should I PC the platinum after trying to get a CLI at 90 days?

Thanks

[Loquat]

With the card being only 3 months old I think it's a bit early to close it because the limit isn't what you want it to be (for now).

I think NFCU can be very generous. The pandemic has certainly slowed down their natural flow of large initial limits but know that this time shall pass and I have no reason to believe that they won't go back to business as usual.

I would suggest hanging in there with the card for a little while longer. The potential is there as long as you give it the right amount of time. They seem to be fairly easy with PCing a card to something else. I would recommend letting it be a placeholder for now.

If you still feel the same way you do in a year, then reconsider the idea of closing it. Just my opinion though...

[Anonymous]

AAOA doesn't go up from closing accounts. As long as the account is reporting, it will affect your AAOA. 

I personally would keep the card. NFCU cards grow rapidly. I started off with a $3000 cashRewards in 9/2018 and I got a $7200 Platinum 12/2018. My cashRewards is now $8500 and my Platinum is my largest limit at $19000. 

NFCU usually has BT offers every January (this year was the first time they didn't offer one to everyone in a number of years) and the 5.99% APR possible on the Platinum makes it a great emergency card. You can of course PC it to another card as long as you're okay with not getting the SUB. 

AAOA is one of the least meaningful credit factors. Generally as long as it's at least a year, you won't have problems. It's also the easiest you can control. If it drops, you just wait until it goes back up before adding new accounts. Each new account also makes each subsequent drop smaller. My spreeing between 2018 and 2020 has made it so that the last new account I added only dropped my AAOA by a single month. 

[Anonymous]

Why not move some limit from the CR over to the Platinum? Increases on both will come in time and your CR will likely end up where it is now or higher. If you aren't spending 15k a month on it, move some to Platinum and reshuffle limits in the future as it suits you.

[AverageJoesCredit]

Great advice in this thread. The Plat is one of their most  valuable cards in their lineup imo, especially during a Pandemic.  Low apr, great Cash advance ability,  room to grow in cl. Very versatile.  I second  moving limits. My $29k CR has some movement on it and still got cli later

[Anonymous]

All good advice. thank you.

I will hold onto it. Next week I will do a CLI and grow it. I did not realize the cash potential and the lowest APR within NFCU along with future balance transfers.

[SecretAzure]

I just want to add something regarding OP's initial belief on the AAOA going up after closure. I also held this misconception for some time early on in my credit journey. I realize it stemmed from Credit Karma. With Vantage Score 3.0, closed accounts are, for some reason, not factored into your scores beyond just having less utilization and cards overall. On CK, they act as if only your active cards are impacting your AAOA. This is completely the opposite of how FICO actually works.

If you close an account, it still has an active role in your AAOA for 10 years after closure. After 10 years, it's like it never even happened and your scores may drop. Depending on how thick and aged your profile is by that point, it may not drop very much, if it drops at all.

The advice in this thread has been great. I just wanted to expand upon why OP may have held the belief that AAOA goes up upon card closure in hopes that more awareness is brought to the fact that many new to credit will probably hold this belief as it makes sense mathematically and the best free resource for learning about credit gives the wrong impression.

[Anonymous]

Just a FYI, even though CK summary software suggests that closed accounts are not factored into age of accounts factors with VS3, they are considered just as they are with Fico scoring models.

One thing we don't know about OP is data surrounding his profile such as income.  Perhaps the reason for the lower SL on the newer card has something to do with exposure already with the lender due to the greater limit on the first card.  This may not apply at all, but just something to consider that I thought of.

[SecretAzure]

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@Anonymous wrote:

Just a FYI, even though CK summary software suggests that closed accounts are not factored into age of accounts factors with VS3, they are considered just as they are with Fico scoring models.

One thing we don't know about OP is data surrounding his profile such as income.  Perhaps the reason for the lower SL on the newer card has something to do with exposure already with the lender due to the greater limit on the first card.  This may not apply at all, but just something to consider that I thought of.

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Hold the phone. VS3 does factor AAOA?! How does it factor in AU accounts though? Because I definitely have some closed AU cards on my CK profile. 

[Anonymous]

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@SecretAzure wrote:

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Hold the phone. VS3 does factor AAOA?! How does it factor in AU accounts though? Because I definitely have some closed AU cards on my CK profile. 

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Yes it does.  No doubt the misconception comes from CKs front end fluff software that suggests otherwise.

This is strait from the VS site from ~2016, although you can't find this now:

Myth: When you close a credit card or pay off a loan, you lose the value of the account's age in your credit scores

Fact: As long as an account is on your credit reports it is considered by credit scoring systems, open or closed and with or without a balance.  As such, if you were to close a credit card that was opened 10 years ago it would still be seen and measured as a 10 year old account. And, closed accounts continue to age so an account that was closed 3 years ago is 3 years older today.  As such, closing accounts will not result in a reduction in your credit scores as a result of the loss of the value of the account’s age.

I do not know about AU accounts specifically, but if they're on your CR my take would be that they're being factored into your age of accounts as well by the algorithm just like other accounts.