Switching AMEX cards and impact on credit rating

Anonymous · ‎02-07-2017

I'm interested in applying for the American Express Blue Cash Everyday, with the intent of that replacing my AMEX green card and its $55 per year membership fee. But I don't want to damage my currently great credit rating. Would making this switch, including discontinuing my green card, damage my credit rating? I would not be interested in both as I currently already have another cash back card.

Anonymous · ‎02-07-2017

@Anonymous wrote:
I'm interested in applying for the American Express Blue Cash Everyday, with the intent of that replacing my AMEX green card and its $55 per year membership fee. But I don't want to damage my currently great credit rating. Would making this switch, including discontinuing my green card, damage my credit rating? I would not be interested in both as I currently already have another cash back card.

What do you mean by credit rating?

Will your score drop by closing the green card? NO it will remain on your reports for 10 years.

Will your AAOA drop by opening a new account? YES

Anonymous · ‎02-07-2017

Tell us more about your great credit rating?

Anonymous · ‎02-07-2017

Hi Donny,

When I ask about whether my "credit rating" would drop, I mean the FICO score.

When you say that the closed Amex green card history will remain for 10 years, after the card disappears, does that lost history affect the FICO score?

Maybe a better question would be, what is the negative impact to anything related to my credit rating or score(s) if I were to cancel my Amex green card for the Amex credit card primarily for the purpose of saving myself that $55 annual fee on the green card?

Thank you kindly,

Rob

Anonymous · ‎02-07-2017

It will have two minor impacts on your score. It will NOT screw up your credit.

1. You will see a small decrease for the inquiry and for having a new account (AAoA decrease). This is minor and should recover in about a year or so.

2. Your utilization profile will change, your Green card is a charge card with no limits and it's not currently being counted in your utilization at all. Your BCE will be a revolving card where your utilization on the card vs its limit and your total limit will count in your score

Assuming you pay in full every month as you clearly have with your Green card this should not matter much but you may notice it.

Unless you are about to apply for a mortgage I say go for it. Save yourself the annual fee.

Anonymous · ‎02-07-2017

Donny10 and Canadian-in-Seattle,

Thank you both for sharing your knowledge. I'll review your responses and this website and get a better understanding of this topic.

Much appreciated.

Sincerely,

Rob

Anonymous · ‎02-07-2017

@Anonymous wrote:
Hi Donny,

When I ask about whether my "credit rating" would drop, I mean the FICO score.

When you say that the closed Amex green card history will remain for 10 years, after the card disappears, does that lost history affect the FICO score?

Maybe a better question would be, what is the negative impact to anything related to my credit rating or score(s) if I were to cancel my Amex green card for the Amex credit card primarily for the purpose of saving myself that $55 annual fee on the green card?

Thank you kindly,
Rob

Rob- it could effect your scores 10 years from now. How much is going to depend on how old your current cards you have now and how long you keep them open. It may have little to no effect in 10 years. There are many variables.

I'm not sure if I would be overly concerned about what the effect closing one card will have in 10 years. Do you have other credit cards?

Anonymous · ‎02-07-2017

Hi Donny10,

I have three other cards, yes, all credit cards. Currently I only use one of them and pay the full balance each month. I see what you mean about looking out 10 years from now.

Rob

Anonymous · ‎02-07-2017

@Anonymous wrote:
It will have two minor impacts on your score. It will NOT screw up your credit.

1. You will see a small decrease for the inquiry and for having a new account (AAoA decrease). This is minor and should recover in about a year or so.

2. Your utilization profile will change, your Green card is a charge card with no limits and it's not currently being counted in your utilization at all. Your BCE will be a revolving card where your utilization on the card vs its limit and your total limit will count in your score

Assuming you pay in full every month as you clearly have with your Green card this should not matter much but you may notice it.

Unless you are about to apply for a mortgage I say go for it. Save yourself the annual fee.

Not so fast. Even though the charge card has no credit limit listed in that particular field. The highest balance reported could be used as default. And factored into utilization.

Another words, your credit limits across the board is 30k and your highest balance on the green card was was listed at $1,500. $31,500.00 could be used.

Balances equalling $3150 = 10% aggregate utilization.

Anonymous · ‎02-07-2017

Donny, only under old models which are only really used for mortgage applications in case as others pointed out to me recently you should be controlling utilization tightly anyway.

I can tell you that under recent FICO models balances on charge cards are completely excluded.

I used to have an Amex PRG which I used as my primary card for everything, and reviewed my score via CCT on all the bureaus monthly. My entire balance on my PRG was completely excluded from utilization and when I switched my spending to my CITI DC there was a noticible drop in my score resulting from the increase in utilization as it started counting.

I believe you are right with respect to old FICO models but they are only used by mortgage lenders in which case you shouldn't be letting balances report at all others than on one card.