Advice needed - close credit cards vs. reduce credit limits

[Matt@EuroJerks]

Originally Posted by infinitekid2002

he'll end up keeping it open; gotta shop for accent pillows

AHEM....Homegoods

[jgoens]

Originally Posted by 3 Stripes

920? What kind of witchcraft is this?

Originally Posted by Doc Oc

I'm lost, 850 is highest possible, no?

Haha..typed wrong by a hundred. Was 820 and 790 respectively. Edited.

[infinitekidM2C]

Originally Posted by Matt@EuroJerks

AHEM....Homegoods

hahaha I'm just messing as i have gone to shop for house stuff with my wife more times than i will admit

[jgoens]

Originally Posted by Hawkeye

Perhaps talking about what rating scale people are talking about would help. FICO 8 only goes to 850. Also you shouldn't pay off "almost" all of your balance. You should pay your entire balance each month so you are not paying any interest. As long as you have a balance near the end of the month (when most companies report to the bureaus) it will still count towards you utilizing.





edit: I see you meant Length of History and not "credit history" so I'll update my post accordingly.

15% would only be 82.5 points. Having 82 points based just on the length of history is pretty significant.

FICO doesn't release their proprietary formula so any % impact from any one criteria is purely a guess. There are also different scores based on what you are applying for credit wise (house, car, credit card, etc). I am also pretty sure it is closer to 5-7 years that credit accounts drop after they stop reporting to the bureaus.

I think it is good you're on finance forums and whatnot, but perhaps you should pay more attention and not tell people closing cards will have no effect. Maybe if they are relatively new cards with $300 limit but some of us have $30k+ average card limits and that does have a big effect.

I pay off all my balances each month now, but when I was building the score to buy a house I was able to get to 840 in a matter of a year or so.

[Lucky John]

Originally Posted by Doc Oc

I'm lost, 850 is highest possible, no?

No, nextgen goes to 950.

https://en.wikipedia.org/wiki/Credit..._United_States

The misinformation in this thread is funny/scary.

You should do neither. Leave the accounts open with as high a credit limit as possible.

[Hawkeye]

Originally Posted by jgoens

I pay off all my balances each month now, but when I was building the score to buy a house I was able to get to 840 in a matter of a year or so.

Yeah, but you paid interest you did not need to then. Like I said, most companies report once a month (near the end of the month) and your balance at that point in time is what is sent. It doesn't matter if you pay off completely every month or not as long as you have something on there the one day they send the information.

[jgoens]

Originally Posted by Hawkeye

Yeah, but you paid interest you did not need to then. Like I said, most companies report once a month (near the end of the month) and your balance at that point in time is what is sent. It doesn't matter if you pay off completely every month or not as long as you have something on there the one day they send the information.

I'm not expert, just saying what I was told and what worked very quickly for me and has afforded me the best interest rates in my purchases.

[IllSic_Design]

Actually, having a LOT of credit available is actually a good thing for your credit score. Do not close any cards out unless they have a annual fee and you do not use them. Your average length of having credit(which affects your score) will be affected especially if you close an account that has been open a while. It happened to me when I closed one of my first cards I got and it affected my score(Negatively, as my available credit dropped while my percentage of use went up since I lost that available credit, and my length of open credit shortened which made it also drop).

Crazy to see on a bimmer forum all the wrong/bad info given on credit.

[Haywood]

I signed up for the Discover Scorecard. Here are the FICO weighted categories:

Total Accounts

Your credit mix accounts for about 10% of your FICO® Credit Score

Length of Credit

The length of your credit history is about 15% of your FICO® Credit Score.

Inquires

New Credit determines about 10% of your FICO® Credit Score.

Revolving Utilization

Amounts owed determines about 30% of your FICO® Credit Score.

Missed Payments

Payment history determines about 35% of your FICO® Credit Score.

[UncleWede]

Originally Posted by Haywood

I signed up for the Discover Scorecard. Here are the FICO weighted categories:

Total Accounts

Your credit mix accounts for about 10% of your FICO® Credit Score

Length of Credit

The length of your credit history is about 15% of your FICO® Credit Score.

Inquires

New Credit determines about 10% of your FICO® Credit Score.

Revolving Utilization

Amounts owed determines about 30% of your FICO® Credit Score.

Missed Payments

Payment history determines about 35% of your FICO® Credit Score.

Yeah, but did you get any frog protection???

[shadow191]

Exactly, even if you pay off your balance in full each month and don't pay any interest, the balance is reported to the agencies. My credit reports always show high utilization even though I pay in full each month. Paying the interest isn't necessary.

The algorithms that the credit scoring agencies use are pretty smart and they're always being adjusted. If you don't maintain high credit utilization and pay your bills every month you'll generally be fine. Trying to manipulate the system might by you a few points but it's not meaningful. I think I have 10 cards open at any given time with a total amount near $150K because of sign up bonuses and my score is near the max with all of the credit scorers. My wife has 2-3 cards open usually and her score averages 10 points higher.

There are those who churn credit cards and open dozens a year with scores in the 800's. As long as you pay your bills on time and have credit history the rest is minor.

Originally Posted by Hawkeye

Yeah, but you paid interest you did not need to then. Like I said, most companies report once a month (near the end of the month) and your balance at that point in time is what is sent. It doesn't matter if you pay off completely every month or not as long as you have something on there the one day they send the information.

[Haywood]

Originally Posted by UncleWede

Yeah, but did you get any frog protection???

Lol! I hate those stupid commercials! The one with the guy talking to his dog and the Discover card employee thinks he's talking to him is the worst.

[Reggie_2005]

just responding with a general comment.

once the cards are open, you don't really want to close them.

it's all about credit ratio, so the higher your overall limits compared to actual usage, the better.

typically you don't want to go over 30% with each card, and obviously the lower the balance is, the higher your credit score will boost.

so just pay them off, and then have them essentially in rotation when you go to the store. closing them isn't gonna help with credit, and it could actually make it worse.

for example. lets say you have a card thats 1000 limit, and one thats 2000.

if you're at 30% total, that means you used 900 of the available 3000. maybe you have 100 dollars on the 1000, and 800 on the 2000.

if you closed the 1000 after paying it off, but didn't pay down the $800 from the 2000 credit card, well now you're overall credit utilization is 40%, and your credit score will go down.

overall, just keep the cards open and keep them with low balances.

[bimmer456]

Keep your credit cards open but only use a good cash back or travel card. If your cards have annual fees downgrade then to one that doesn't have an annual fee so your credit history and oldest accounts stay the same. A higher credit limit and lower utilization is better for your score as well as average age of accounts.

[David70]

Depends on how many cards you have and how much you need the very last points on your credit score. I have good credit, two credit cards and if I decide I want a different credit card I will get it and get rid of one of the ones I have. I don't plan on taking out a loan in the next 5-10 years and even if I did I think my credit score won't be affected enough that I would want to deal with keeping extra cards and then worrying about unauthorized transactions on them.

Maybe I missed it but how many credit cards do you have? Is your credit score at a point where a slight dip would cost you more money on a loan?

[Scout10]

Originally Posted by Doc Oc

I'm lost, 850 is highest possible, no?

3 major reporting agencies . . . .
each uses a system tweeked to their own calling?
(the 850 one is the most used)

I'm at 836, and the wife is 832 ?

[GCinFLA]

Originally Posted by Scout10

3 major reporting agencies . . . .
each uses a system tweeked to their own calling?
(the 850 one is the most used)

I'm at 836, and the wife is 832 ?

There are 28 (iirc) FICO credit scores. Most go to 850, but some (such as Car Loans) go to 900.

However, Credit Scores are not the proprietary FiCO scores. They are seldom used but given in most annual free credit reports as required by law and a different scale.

Depending on what generic score, they can go upwards of 1,000 and it sounds as if some on this thread are using them while others are quoting FICO scores.

As noted, there are also other formulas such as nextgen with different scales.

So quoting FICO means nothing as there are 28 FICO Scores.

People are comparing apples to oranges.

[GCinFLA]

Originally Posted by Haywood

Thanks. Would you recommend reducing the credit limits on those cards?

Allow me to show you how minor the difference is using the factors you are questioning over 90 days.

[Haywood]

Originally Posted by GCinFLA

Allow me to show you how minor the difference is using the factors you are questioning over 90 days.

Damn dude! That's awesome. I'm jealous.

[BayMoWe335]

I'd advise never closing a line of credit. Why do it? I'd also never open store credit cards...just stick with the major banks.

My Experian score is 848 and TransUnion is 847 as of this morning.

I have over $100,000 is credit card credit, but my current balance is like $500. The thing that is "hurting" my near perfect score is my relatively short length of credit history. I have no idea why I can't get a perfect score. I think one month, it was literally 849 and it's been bouncing between 845 and 849 for like 2 years. The credit/balance ratio I think really helps my score.

http://www.experian.com/blogs/ask-ex...coring-ranges/

[B58togo]

Originally Posted by Haywood

Thanks. Makes sense. It was feedback I was getting on my credit score that stated I had too much open credit. My goal is to be in the high 800's.

There is no "high" 800's unless you're talking about some bogus Vantage score or something other than a true FICO score. FICO is capped at 850. FICO is the only score to be concerned with. You have one with Trans Union, one with Experian and one with Equifax.

[B58togo]

Originally Posted by Lucky John

No, nextgen goes to 950.

https://en.wikipedia.org/wiki/Credit..._United_States

The misinformation in this thread is funny/scary.

You should do neither. Leave the accounts open with as high a credit limit as possible.

Next Gen scores are a joke in the credit industry. It'll never be used to assess your credit worthiness when applying for credit. Worry about your classic FICO 8, and if it's good, your auto, bank card, mortgage score will generally be good as well.