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Should we close my spouses old credit cards?

rangeseeker
New Contributor

Re: Should we close my spouses old credit cards?


@SouthJamaica wrote:

@rangeseeker wrote:

My wife has 3 cards which we do not share: Amazon, TJ Max and US Bank. They all have credit limits below $1,600. She is on 3 of my credit cards, Amex green, Amex BCP, Chase Sapphire (no fee version) which give her access to about $40k in total credit. We are also looking to buy a house within 2-3 years. Could we close two or three of her credit cards without too much impact to her credit? The US Bank is the oldest, so could we just close the Amazon and TJ Max cards without too much of an impact? 

 

Break down of dates opened: 

US Bank: SEP 2017

TJ Max: JUL 2019

Amazon: MAR 2018

Chase: OCT 2015 (Not sure why it shows this far back? Didn't add her until 2020 I think)

Apple Card: SEP 2019

Amex Green: DEC 2018

Amex BCP: AUG 2021

 


It's not going to lower her score, but I wouldn't close any of them. Nothing will be gained by closing them.


Good point, I'm thinking we will wait until after our mortgage approval to take any action. We really do want to build her credit up though. 

Message 11 of 24
rangeseeker
New Contributor

Re: Should we close my spouses old credit cards?


@chiefone4u wrote:

It can be challenging to manage multiple accounts, especially when doing so for more than one person. 

 

I would suggest setting up auto pay for minimum due to insure you don't have something sneak through leading up to a home loan.

 

If I remember correctly (someone else should be through before long to correct me if wrong), authorized user cards do very little for mortgage scores. Some profiles seem to respond well to AU cards being $0, others require a balance for the card to help.

 

Best mortgage scores come from AZEO (All Zero Except One), for that to work you need at least 3 cards. Mortgage scores want no more than 1/3rd of cards reporting a balance, so dropping her to one card that's not AU could effect her scores.

 

Mortgage scores also like an installment loan (I wouldn't open one just for points if you don't have one... it could cause DTI issues depending on your income and how much you're looking to borrow).


Setting up auto pay is an obvious choice that completely slipped my mind. Would you suggest doing AZEO with the cards solely in her name? And me doing the same with mine? Great advice by the way, thank you. 

Message 12 of 24
Lou-natic
New Contributor

Re: Should we close my spouses old credit cards?


@rangeseeker wrote:


Setting up auto pay is an obvious choice that completely slipped my mind. Would you suggest doing AZEO with the cards solely in her name? And me doing the same with mine? Great advice by the way, thank you. 


I would close the card that she likes/uses the least and practice AZEO starting about 3-4 months out from when you know for sure you are about to start the mortgage process with the remaining 3 cards for the maximum credit boost. You don't need to do it years in advance. Same goes to you as well.

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Message 13 of 24
Anonymalous
Frequent Contributor

Re: Should we close my spouses old credit cards?

I'm confused. Does your wife have bad credit or just low credit limits?

 

If it's just about low limits, then update all her current cards with your combined income (this how it's supposed to work, since you share a household and expenses), and then request credit line increases. Avoid hard pull CLIs if you're going for a mortgage. You may be surprised at the result. They may require POI, but you can easily provide that. Use the same income for any new CC applications.

 

Whether it's about CLs or bad credit, she needs cards in her own name. To build a strong credit profile, she needs about 5 cards that are her own responsibility, not just AU cards. These can be the cards she currently has, or new ones (just be aware of the age hit, and whether you're going for a mortgage), but I wouldn't close any of her cards until she has replacements.

 

 

Message 14 of 24
disdreamin
Valued Contributor

Re: Should we close my spouses old credit cards?

I'm curious what the thought process is behind closing cards when your wife has only 3 cards in her own name. What would you expect to be gained by doing so? I understand the annoyance of keeping track of paying for cards like that, but with minimal use and auto pay set up on them it shouldn't be a big hassle.

 

Frankly I wouldn't want my SO almost entirely (or entirely) dependent on my accounts for credit. I ran into that issue a short while back and I encouraged my SO to app for a couple cards so their credit wasn't so reliant on mine. If something happened to you, all the cards your wife is AU on couldn't be used and that could put her in a bad spot.

Message 15 of 24
dragontears
Senior Contributor

Re: Should we close my spouses old credit cards?


@disdreamin wrote:

I'm curious what the thought process is behind closing cards when your wife has only 3 cards in her own name. What would you expect to be gained by doing so? I understand the annoyance of keeping track of paying for cards like that, but with minimal use and auto pay set up on them it shouldn't be a big hassle.

 

Frankly I wouldn't want my SO almost entirely (or entirely) dependent on my accounts for credit. I ran into that issue a short while back and I encouraged my SO to app for a couple cards so their credit wasn't so reliant on mine. If something happened to you, all the cards your wife is AU on couldn't be used and that could put her in a bad spot.


+100

As someone who suddenly became a widow in my mid 20s, I can tell you that the unexpected can happen at any time and if the worst was to occur, you should make sure that your spouse will not suffer more than necessary. In the context of this thread, that means she should establish and maintain credit independent from your credit. 

Message 16 of 24
jamie123
Valued Contributor

Re: Should we close my spouses old credit cards?

IMHO you are confusing a few different issues. You are linking "building up her credit" with "low credit limits".

 

If you want to increase her credit limits, she needs to update her reported income using your combined income as a married couple to her credit cards. Then she needs to ask for Credit Line Increases every 6 months. This will easily raise the credit limits on her cards within a couple of years.

 

You really need 3 credit cards in your own name to receive the best credit SCORES. You would be killing her ability to have high scores in the future if she lost your AU cards for any reason.

 

You mention wanting to close her Amazon card which I personally consider a great card, especially if you are a Prime Member. You get 5% cash back on most purchases and there really isn't a better card out there that can do that.

 

As others have stated, don't do anything that would result in a hard pull before you apply for the mortgage. 

 

Good luck!


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Message 17 of 24
chiefone4u
Established Contributor

Re: Should we close my spouses old credit cards?


@rangeseeker wrote:

@chiefone4u wrote:

It can be challenging to manage multiple accounts, especially when doing so for more than one person. 

 

I would suggest setting up auto pay for minimum due to insure you don't have something sneak through leading up to a home loan.

 

If I remember correctly (someone else should be through before long to correct me if wrong), authorized user cards do very little for mortgage scores. Some profiles seem to respond well to AU cards being $0, others require a balance for the card to help.

 

Best mortgage scores come from AZEO (All Zero Except One), for that to work you need at least 3 cards. Mortgage scores want no more than 1/3rd of cards reporting a balance, so dropping her to one card that's not AU could effect her scores.

 

Mortgage scores also like an installment loan (I wouldn't open one just for points if you don't have one... it could cause DTI issues depending on your income and how much you're looking to borrow).


Setting up auto pay is an obvious choice that completely slipped my mind. Would you suggest doing AZEO with the cards solely in her name? And me doing the same with mine? Great advice by the way, thank you. 


As another poster mentioned, you don't have to practice AZEO full time, or for life. AZEO pertains to utilization, and as far as mortgage Fico scores go... utilization has no memory.

 

You'll typically want to start practicing AZEO 2-3 month's before you plan to apply for a mortgage to ensure all accounts have a chance to report the new utilization,  and continue to practice AZEO until you have keys in hand (as depending on how long it takes you to go from application to close, the lender may pull your credit multiple times -- normally soft pulls to make sure nothing major has changed).

 

If you start AZEO 6 month's before mortgage, you could potentially play with variations to see if an AU card with a balance plus her own cards AZEO get her better scores than AZEO alone. This will also point you towards which card you have post a balance while doing AZEO on your own file.

 

Incase you are unaware, banks use the lowest  middle mortgage score of the applicants... so if you have a 740, 760 and 820 and you wife has a 510, 720 and 780. In the example your (made up) middle score is 760 and hers 720... because hers is lower the 720 is the score being used unless you leave her off the mortgage (which would also mean you couldn't use her income for DTI).

 

Hopefully I haven't confused the issue with my response. 

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Message 18 of 24
Binbinimiwi
Contributor

Re: Should we close my spouses old credit cards?

100% agree with this. No one ever goes into marriage or live their married life preparing for divorce or death of a spouse, but these things happen and leave lower or $0 earning wives in horrible circumstances because they don't have a recent credit history to help get them on their feet or even just stay on their feet.

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Message 19 of 24
SoCalGardener
Valued Contributor

Re: Should we close my spouses old credit cards?


@rangeseeker wrote:


If we close the cards (Amzn, TJ, USB) she will only be left with one card that she is not an authorized user on, the Apple card. The other cards are my cards which she is an AU on. What we hope to gain is mostly peace of mind, I don't like having open credit lines that are not tracked well. I also don't like having cards at multiple institutions, it's just frustrating keeping track of them all. She had a late payment on the Amazon card recently which was extremely frustating, but luckily it fell within the grace period (no credit impact). 


After reading through this entire thread, I'm a little confused. You're talking about 'peace of mind' and 'keeping track' of a lot of cards....but what's your wife's role in this? She had a late payment on her Amazon card? (Mod cut - please take the tone down a notch -- less abrasive ways to ask a question without resorting to CAPS in accusatory fashion) Who's responsible for what? Why are you the one stressing over her cards? And does she have bad credit, or what?

 

I agree 100% with those who've pointed out that women need credit in their own names. If your wife isn't managing her own credit, you may *think* you're doing her a favor, but you're really not--just note the replies mentioning things like becoming a young widow. Life happens. As do divorce, death, unemployment, illness, and a myriad of other things that can affect people financially. She needs to have a firm grasp on managing credit, and that includes paying her own bills, on time.

 

If I were you your wife, I'd keep all those cards open, and start working on improving them, with an eye toward getting better cards later on. Use them regularly and pay them regularly. Request credit limit increases as often as allowed per card--if there is no hard pull involved. If a CLI request does involve a hard pull, your wife needs to weigh the pros and cons before pulling each trigger. Considering the late payment issue, I think setting up auto-pay for every account is a good idea, but even with auto-pay it's always necessary to stay on top of things. For example, checking the bank account each payment is taken from, making sure the payment actually was withdrawn, and, at the other end, making sure it was posted correctly.

 

If you read the boards you'll find out that auto-pay is *not* foolproof. So I can't stress strongly enough how important it is to ACTIVELY monitor one's credit, from logging in to every account frequently to checking for fraudulent activity to making sure the payment was actually withdrawn in the correct amount on the correct date, credit's not a passive activity!

 

Whatever the reasons are that your wife has low limits on her current cards, if she follows the advice offered in this thread, her score can't help but improve and, with that, she'll be able to get better cards and higher limits.

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Message 20 of 24
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