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Today a friend told me he finally went over 800 on his score. Said the reason was he cancelled all but 1 of his oldest CC with a decent limit. He said that the credit bureaus are worried about spending sprees with a bunch of large CC's. Just looking for a general concesus. I always read it was bad to cancell cards. My score now hovers 710-735 with no badies.
@Anonymous wrote:Today a friend told me he finally went over 800 on his score. Said the reason was he cancelled all but 1 of his oldest CC with a decent limit. He said that the credit bureaus are worried about spending sprees with a bunch of large CC's. Just looking for a general concesus. I always read it was bad to cancell cards. My score now hovers 710-735 with no badies.
Where is your friend getting their score from?? The Credit Bureaus dont care and dont have any say so in regards to spending sprees, They just report what the lender tells them. The lender on the other hand is the one who "might" care.
As long as youre handling your credit properly it doesnt matter if your overall total credit is $1k or $1M....if youre using it, paying it, and keeping a low overall utilization reporting ( <30% per industry standards), but 1-9% is the fico ideal, then honestly shouldnt be any issues.
I wouldnt listen to just one person, and their story, and I certainly wouldnt run off and cancel most of my cards just from what your friend said. He/she might get a rude awakening on scores once the the CRA update all that. There are so many factors that go into making up a credit score, and I would tell your friend to at the very least, since they are down to only ONE card now, to let a small balance cut with the statement each month, then PIF. FICO cant score you on revolving accts if there's a zero balance.
I wonder if the OP's friend read something about bust-out fraud. I tend to doubt that the friend fits the profile of a bust-out candidate, though.
Your friend is on crack. Ignore him or her (or at least his/her advice). Most assuredly closing accounts is not the resaon he/she went over an 800 FICO score.
It is possible to gain some FICO scoring points from closing credit cards, but it is in the following rare situation:
The person has 20+ credit cards and closes several to bring his total to (say) 10.
That's because there is a penalty (though not a huge one) for simply having dozens of open cards. That penalty vanishes entirely when you bring that number from "dozens" to "a dozen."
Having a medium number of open cards (e.g. 3-5) is always superior to having exactly one. This is because all FICO models like it when you have several open cards with a zero balance and exactly one with a positive balance. Some models like it more than others, but all models like it to some extent, and there is no way to do that with exactly one card.
I notice that your friend says that "the credit bureaus are worried about spending sprees with a bunch of large CC's." The CB's are not the people who develop the computer program that generates the FICO score. The CB is just a warehouse for the data.
I also notice that he says that he "finally" went over 800. That suggests he may have been in the 790s for sometime and has finally gotten some extra points to go over 800. That kind of score fluctuation is common and is unwise to attribute to anything specific.
It would be interesting to hear how many cards he had open a month ago, and have confirm for certain that he has exactly one open card now. Also interesting where he got the score from -- it might be a Vantage score and not a FICO score.
Certainly in your case you should not take any action similar to that of your friend, though if you'd like advice on how to improve your scores we can certainly help you out.
There is no benefit to close a CC that has no fee, or even one that does which will help your FICO score. It could also infact cause a FICO score drop if youre AAoA or % util changes as a result.
@Anonymous wrote:Today a friend told me he finally went over 800 on his score. Said the reason was he cancelled all but 1 of his oldest CC with a decent limit. He said that the credit bureaus are worried about spending sprees with a bunch of large CC's. Just looking for a general concesus. I always read it was bad to cancell cards. My score now hovers 710-735 with no badies.
The information you are getting from your friend makes no sense. Either that or you are misinterpreting it.
Having a ton of high limit cards could result in AA at some point, although it's not common. I suppose it is worth mentioning. I think the most common one read about on this forum lately are those with Capital One cards with > $10k limits ($20k, $30k, etc) receiving CLDs to $10k for no real reason other than Capital One tightening up the strings a little. During harsh economic times around 10 years ago this was of course much more common.