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I've been rebuilding my credit over a couple of years and in doing so I have 8 credit cards. I started with secured cards and over time if a bank offered me an unsecured card or wanted to upgrade me to an unsecured account, I have taken the offer. It has felt like a slow crawl from 490 to 660, for sure.
Recently in December of 2020 I had two banks that I had secured cards with offer me unsecure cards and I took them. One was Capital One and the other was Credit One. They both had low limits $500 and $300, but I figured they add to me available credit which I needed because my highest cards were secured cards and overall I only had about $2500 of available credit.
They did bring my score up quite a bit. Plus my average credit age was about a year and a half. Things were finally starting to look good. I bank with Citizens bank and while I was online there was an ad in my banking app saying I was preapproved. So I thought what the heck I will check to see if it is legit. I have all 3 credit bureaus locked down so if they tried to check my credit then I knew they couldn't. To my surprise I was approved for World Mastercard with $7500 and 1.8% cashback. Totally stoked, the wheels of dtermination have gained momentum. ! Things are going great it seemed then came the bummer, I logged into my Transunion and refreshed my score and bam, my score had done a nose dive from 660 to 590, I feel totally defeated. I have been trying to reach 700 so dilligently.
So from what I can tell it must have dropped my score because my average age of accounts went down to 1 year when the account was opened. I have no hard inquiries on the big 3, but it does appear that Citizens also reports to a 4th bureau (Just an FYI). If I were to close the 2 prior accounts that I mentioned earlier, I think it would actually raise my credit length and wouldn't dramatically affect my available credit.
My question to the credit gurus on here, is that a smart move or a dumb move? My payment history is 100% on-time and I pay off my blances each month. Thanks in advance for any insight that is offered!
Unfortunately closing accounts won't raise your AAoA (Average Age of Accounts) or credit length. Also, opening a new account wouldn't drop you 70 points either. What score are you looking at/where are you getting it from? If it's from Credit Karma or TransUnion directly, pay it no mind as no major lenders use it (it's a Vantagescore 3.0).
I do use Credit Karma sometimes mainly because they offer tips and explanations for score changes. But that score is coming straight from Transunion. I primarily check Transunion for updated info since I can refresh it daily and I get my Fico scores from Experian once per month. I should clarify that the score I gave was a vantage 3.0 score not FICO.
According to Experian my FICO for Transunion is 618, but I will not know if it has been impacted for another 28 days. I paid off the last collection that was on my report 2 days ago but I don't think that has had time to affect anything yet. I did have a balance of 1205 when the account was reported, so it was reported before my payment was reflected. The only alert that I received from Transunion was,
New Account A new account has appeared on your credit report. Here are the details of this inquiry: | Date Reported: 03/17/2021 |
@OmarGB9 wrote:Unfortunately closing accounts won't raise your AAoA (Average Age of Accounts) or credit length. Also, opening a new account wouldn't drop you 70 points either. What score are you looking at/where are you getting it from? If it's from Credit Karma or TransUnion directly, pay it no mind as no major lenders use it (it's a Vantagescore 3.0).
OP says logged into their Transunion account so that's Vantage 3.
@Anonymous you need to view your FICO scores. Vantage behaves very differently than FICO and the majority of lenders use FICO to make credit decisions.
You can get all 3 FICO 8 scores from Experian's CreditWorks Premium service. They offer a $1/7-day trial - just be sure to cancel before the trial ends if you don't want the monthly service ($24.99).
https://www.experian.com/consumer-products/compare-credit-report-and-score-products.html
Edit: and I was typing as you posted - you already know about Vantage and FICO I see... your FICO scores wouldn't have such a dramatic response to a new account.
Thanks for the information everyone. I'm glad I asked before panicking and making it worse!