Credit Score Utilization Question?

[kiea]

Yesterday I was approved for a Williams-Sonoma store card with a $1000.00 credit limit.  Currently my utilization is at 1%...Am I correct in assuming I will not receive a score increase since my utilization is already low?

[Anonymous]

You will receive no benefit from the total utilization factor.  It was 1% before and it will stay 1% after.  There is no evidence that there could be any score change resulting from total utilization in the 1-3% range, and frankly I am skeptical about a higher utilization doing that.

It looks like you have at least six cards before the app.  When the new card appears that would be seven.  It will enable you to have one extra $0 balance on an open account, which could affect your score if you had 3 cards with a balance. 

But you could have gotten all the points from that factor just from the AZEO strategy (given your six cards).  The seventh card doesn't really help.

For what it is worth, I'd consider closing that Credit One at least two months before the annual fee is due next.  And I would avoid opening more store cards (store cards don't hurt your FICO score but they are not ideal for a number of reasons).

[kiea]

Thank you for replying.  Unfortunately, I am stuck with the Credit One card until at least August and the fees will began in June.  I plan on applying for Capital One in August.  I tried now but I was denied due to too many inquires on my EQ report.

[Anonymous]

I am puzzled.  Why are you stuck with the Credit One until at least August?  You have several other credit cards.

[Anonymous]

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@kieaYesterday I was approved for a Williams-Sonoma store card with a $1000.00 credit limit.  Currently my utilization is at 1%...Am I correct in assuming I will not receive a score increase since my utilization is already low?

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Not only will you not receive a score increase for the reasons related to utilization that CGID mentioned above, but you should plan on seeing a score decrease due to the inquiry, new account and possible age of accounts reductions.  While a decrease doesn't happen every time, it certainly happens more often than not with the addition of a new account.

I'm also just as confused as CGID is as to why you feel you can't close your Credit One account ASAP?

[CH-7-Mission-Accomplished]

Can I ask what rate you are paying on that auto loan?   Just curious.  I haven't heard of that company before.

[kiea]

I have a lot of inquiries on my EQ and EX reports from auto shopping that are preventing me from getting approved for a decent credit card.  That is why I got my store cards by using the SCT...I didn't want any more inquires.  In July all my inquires will be 1 year old and that time I hope to get rid of Credit One and replace it with a Capital One card.  Discover was included in my bankruptcy so I can't get back in with them right now and I tried Barclays 2 weeks ago the representative told me they will like to see a little more payment history after bankruptcy.  He told me to try again in a few months.  Plus the Credit One card was the first one I'd opened so it's the longest...I'm a little scared to close it becuase my score finally started to increase.

This is why I said I'm stuck.

[kiea]

Sure I'm paying 10%...and $309.27 a month

It's an online lender.  I only had them for 3 months but so far I'm happy.  They do a soft pull on your credit report to pre-approve you.  My only concern is they do not report to EQ so I'm losing the positive payment history on that report.

[Anonymous]

When was the Credit One Opened?  And when were the next two oldest cards opened?

Given that you already have several other cards (and you have a very low total utilization) closing the Credit One will have no effect on your score at all.  The only way you'd have an effect is when that closed card falls off your report, which for almost everyone (with a few exceptions) happens ten years after the closure.  Even then there'd only be an effect of the C1 was MUCH older than your next oldest account.  E.g. if your C1 is currently 12 years and the next oldest is 1.5 years.

The C1 is costing you money every time you pay that annual fee.  Most of us here would advise you to close that card well before the next fee is due.  Since I think you said that was in June, we'd suggest closing it now.

Still, if closing it will create massive anxiety, the annual fee is best viewed as a kind of tranquilizer.  Pay it so you aren't terrified about the closing implications.  And then close it this coming winter.

[kiea]

I opened the Capital One in June and I opened the 1st Premier (I want to close this one too) and Kohls in September.
I will seriously think about closing the Credit One card since you're saying it won't effect my score. Thank you for the advice