Will closing one of two store cards boost FICO score?

[Anonymous]

I have a JC Penney card that I opened late in 2015 which is mostly sock drawered. Only other card that is store card like is the Citi Best Buy Visa, which is 2 months old. I have 13 cards with 2 year AAoA. Would closing any cards help me? I am gardening until 2018.

[TiggerDat]

Nope.  If you are gardening then simply keep them!  The longer they are open, the longer they will report good history.  The mix of store cards, credit cards, and loans all help your score!  Even if you close them later they will report for 10 years from the date of close.  It will also help your AAoA later!  I don't usually close cards, but there may come a time when it might be beneficial.  If you have too much available outstanding a bank might not give you a loan.  Since you are gardening it is only wise to simply leave them alone.

[Anonymous]

No, closing one of two store cards will not boost your score.

There is one way it could actually hurt your score a little.  By closing a card, your overall credit limits drop by the amount of that trade line.  If you keep little to no balance, the impact of this probably won't matter.  If you do carry balances however, this could increase your overall utilization and if it crosses a threshold (9% for example) your score could drop a little bit.

[Anonymous]

Great comments by the other folks.

The one advantage of closing store cards is that there are non-FICO scoring models -- such as the one that your auto insurance provider uses, for example -- where the simple presence of store cards on your report lowers your score.

As the other folks mention, closing a store card won't improve your FICO score, since FICO doesn't distinguish between store vs. major CCs.  But in a model that does make that distnction, it can be a good decision, if all of the following are true:

*  You already have at least three other cards you know you will keep

*  The store card doesn't give you any special rewards or any other value

*  Losing its credit limit as part of your total CL won't make it harder to keep your utilization very low

*  The store card is NOT your oldest open card.

[Revelate]

---

@Anonymous wrote:

Great comments by the other folks.

The one advantage of closing store cards is that there are non-FICO scoring models -- such as the one that your auto insurance provider uses, for example -- where the simple presence of store cards on your report lowers your score.

As the other folks mention, closing a store card won't improve your FICO score, since FICO doesn't distinguish between store vs. major CCs.  But in a model that does make that distnction, it can be a good decision, if all of the following are true:

*  You already have at least three other cards you know you will keep

*  The store card doesn't give you any special rewards or any other value

*  Losing its credit limit as part of your total CL won't make it harder to keep your utilization very low

*  The store card is NOT your oldest open card.

---

Good chance that's a 10 year penalty anyway.  

That said, I wouldn't keep store cards around if not using personally.  I only opened up one store card in my build (Wally) and that's one of 2 credit decisions I regret making looking back.

[Anonymous]

Thanks, Revelate!  Yeah I have seen mixed evidence on that, none of which I can remember specifically.  That is, I remember seeing something that convinced me that a closed store card might not be counted. 

The explicit reason code from LexisNexis (Auto Insurance model) is code #0134:

Number of Department Store Accounts Established

2 accounts or less is better

(1)  What information is this message derived from?
The score considers the number of accounts that you have opened with department stores.  These are accounts primarily with stores such as JC Penney, Macy’s, Bloomingdales’ etc.

(2)  How does this affect my insurance risk score?
Insurance industry research shows that  consumers who open accounts with department stores experience more insurance losses.

(3)  What can I do to improve this aspect of my score?

Once you have opened the account and regardless of whether you use it or not your score will be impacted by this factor. Open new accounts only when needed.

At least two things of interest there:

(a)  It suggests that the penalty may not begin until you have three store cards.

(b)  The language in #3 leans toward implying that closed store accounts are counted.  But it might well mean only what it says: that whether or not the card is used (i.e. shows a balance) doesn't matter.  Perhaps it is trying to make clear that paying the card to $0 and then not using it any more won't help.  It does not really tell you whether closing the store card might help you immediately.

Regardless, closing unneeded store cards is at least a good decision in the long term, as you say, since eventually the closed account will fall off.  It's also quite possible that if a fellow were to pester the original creditor long enough, much in the vein of repeated good will letters, the creditor would be willing to delete the closed account completely from his reports.

[DollyLama]

---

@Anonymous wrote:

Thanks, Revelate!  Yeah I have seen mixed evidence on that, none of which I can remember specifically.  That is, I remember seeing something that convinced me that a closed store card might not be counted. 

The explicit reason code from LexisNexis (Auto Insurance model) is code #0134:

Number of Department Store Accounts Established

2 accounts or less is better

(1)  What information is this message derived from?
The score considers the number of accounts that you have opened with department stores.  These are accounts primarily with stores such as JC Penney, Macy’s, Bloomingdales’ etc.

(2)  How does this affect my insurance risk score?
Insurance industry research shows that  consumers who open accounts with department stores experience more insurance losses.

(3)  What can I do to improve this aspect of my score?

Once you have opened the account and regardless of whether you use it or not your score will be impacted by this factor. Open new accounts only when needed.

At least two things of interest there:

(a)  It suggests that the penalty may not begin until you have three store cards.

(b)  The language in #3 leans toward implying that closed store accounts are counted.  But it might well mean only what it says: that whether or not the card is used (i.e. shows a balance) doesn't matter.  Perhaps it is trying to make clear that paying the card to $0 and then not using it any more won't help.  It does not really tell you whether closing the store card might help you immediately.

Regardless, closing unneeded store cards is at least a good decision in the long term, as you say, since eventually the closed account will fall off.  It's also quite possible that if a fellow were to pester the original creditor long enough, much in the vein of repeated good will letters, the creditor would be willing to delete the closed account completely from his reports.

I never was aware of this, you learn something new everyday. I only have 2 straight Dept Store cards, a third and final only is Amazon, is that considered Department Store?  Even if I would get a LN report, I most likely wouldn't understand it. Any other factors that stand out badly against auto insurance? (not claims, driving offenses, etc) If not allowed due to nature of these being FICO forums, please disregard and apologies. 

[Anonymous]

Sure.  There are all kinds of ways that the auto insurance models are different.

First off, great point that you made about the models only considering the information on your report.  That's right.  In addition to the credit score you get from their auto insurance model, the insurer very much considers other factors:

       Age of driver

       Driving record

       Zip code of residence

       Make, model, and even color of car (red is bad)

       etc.

But none of these are factors in their credit score.

That said, here are some ways that the insurance models are different:

They are hyper HYPER sensitive to inquiries and new accounts, much more than FICO.

They look at your Average Credit Limit (in dollar values)  Lower than 10.5k is not good.  FICO does not care about the size of your credit limits, only your utilization.

They look to see if you have any accounts open with "auto" stores.  (Pep Boys, AutoZone, etc.)  This is a negative factor if you do. 

They look to see if there is a big discrepancy between your age of oldest account and your AAoA.  (For example, Age of Oldest is 22 years and AAoA is 4.)  This is considered a negative -- it's one of their many ways to track if you are opening lots of new accounts.

There are obscure things you'd NEVER guess too, like the fact that you get punished if your oldest account is an installment loan, rather than a credit card.  They like it better when it is a credit card.

One of the best practical steps a person can take (regarding the auto insurance models) is to sign up for Credit Karma.  Karma will give you your auto insurance score (using the TU auto model).  It is squirreled away in their site somewhere.  Just be careful to note that their range is different.  A score of 822 is bad, for example, whereas it is senational with FICO.

[Anonymous]

If you really want some fun bedtime reading, you can find out a lot more about their models here:

https://consumer-solutions.custhelp.com/app/answers/detail/a_id/2523/~/how-do-i-learn-more-about-sco...