Closed Cards, Increased Score

[cem13]

On Monday 01JUN15, I closed 4 credit cards that totaled about $10K in available credit.  The credit limits are $2K~$3K.  By closing these, my average credit limit per card jumped to almost $10K per card.  My highest is NFCU at $25K and the lowest is $5K.

By closing these cards, I received a 6 point bump on all 3 CRA.  I have about $100K in available credit and my utilization is about 1% so closing these cards did not hurt my Utilization at all.  I did this on the direction of the thread "Ask a Back Office Worker Anything" where an alledged U/W for a major bank suggested that closing low lime store cards and "junk" cards can increase your score.

The new reporting hit today and I was pleasently surprised.  Of cousre YMMV.

[SouthJamaica]

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@cem13 wrote:

On Monday 01JUN15, I closed 4 credit cards that totaled about $10K in available credit.  The credit limits are $2K~$3K.  By closing these, my average credit limit per card jumped to almost $10K per card.  My highest is NFCU at $25K and the lowest is $5K.

By closing these cards, I received a 6 point bump on all 3 CRA.  I have about $100K in available credit and my utilization is about 1% so closing these cards did not hurt my Utilization at all.  I did this on the direction of the thread "Ask a Back Office Worker Anything" where an alledged U/W for a major bank suggested that closing low lime store cards and "junk" cards can increase your score.

The new reporting hit today and I was pleasently surprised.  Of cousre YMMV.

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Wow, this is fascinating. The conventional wisdom, I thought, was that it's good to keep everything open to keep your utilization low and not shorten average age of accounts.

This kind of stands that wisdom on its head.

[SouthJamaica]

Do you have a link to that thread?

[Anonymous]

Congrats!    I closed all of my low limit cc's recently.  Just kept a couple of store cards that we use for the sales & rewards.  And trying to bump them up to 3k or they're going to go also.  They're taking forever to drop off of my reports.  Great to know that we will see success!!!

[Revelate]

Interesting, I was planning to kick my one retail card (Wally) to the curb, and I do know I get dinged by it on some models (consumer finance account) but I'd always thought it applied equally to closed accounts.

That's a small change to track though, could be a spurious data point... when I get back to normal flatline after mortgage and whatever cards I open up afterwards I may close it rather than letting Synchrony close and see what happens.

[cem13]

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@SouthJamaica wrote:

Do you have a link to that thread?

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http://ficoforums.myfico.com/t5/Credit-Cards/Ask-A-Back-Office-CC-Company-Employee-ANYTHING/td-p/381...

It has not been updated in a few months but the Q&A is great.

[Anonymous]

Very nice i just axed a bunch of my Sub Prime cards We will see if I get the same results. 

[cem13]

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@Anonymous wrote:

Very nice i just axed a bunch of my Sub Prime cards We will see if I get the same results. 

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The only problem that I can see is with overall available credit and utilization.  I had over $100K in available credit and only $2K reporting for ab 2% UTIL.  So closing $10K and 4 cards does not hurt me at all.

[Anonymous]

The cards i axed where total CL of 7.5k. So it will not make a dent in my UTIL 

*Editted Spelling*

[Anonymous]

Hello SouthJamaica!  Always nice to see you on here.  You write:

Wow, this is fascinating. The conventional wisdom, I thought, was that it's good to keep everything open to keep your utilization low and not shorten average age of accounts.  This kind of stands that wisdom on its head.

I agree that this story IS fascinating.  But I wouldn't want you to misunderstand the conventional wisdom either, which shouldn't really say that closing accounts will shorten your AAoA.  Some ill informed journalists will say that, but reputable ones (e.g. John Ulzheimer) are always reminding people that a closed account continues to age and counts just as much toward your AAoA as an open one does.

Even as far as keeping your utilization low, that's more of a trope of bad journalists.  Sure, always be conscious of what closing a card will do to your total credit limit.  Make sure, in other words, that when you close it you are making an informed decision.  But honestly, the best way to control your utilization is by controlling your spending and paying the cards you use down, not by trying to keep boatloads of credit lines going.

CEM13's approach is for people who, in the course of adding many CCs over time, have likely started with "junk" cards and have gradually moved on to bigger high-end Visas and Amex's and Mastercards with high CLs.  Throwing away the junk cards may be like throwing away a ladder that you have used to climb to a new height with; you needed it before but not any more.