Closing Cards and its effect on Credit

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Jessetaylor
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Closing Cards and its effect on Credit

Postby Jessetaylor » Sun Jul 27, 2014 9:52 pm

Hey guys,

I have a Discover Card with a $4,500 limit, AMEX Gold with NPSL and a Visa Banana Republic card with a $4,000 limit.
This Banana card was signed up for through shoddy sales tactics and I was not aware I was signing up for one at the store. I have had it for about 6 months and never use it.

I want to cancel it, but before doing so I'd like to know what happens when you cancel a credit card and how it effects your credit score.

It would seem a good idea to keep it as that would show a higher overall asset to debt ratio under my name, but that's a guess.

Thoughts?
AMEX Premier Rewards Gold
Chase Sapphire Preferred $9,000
Discover $6,000
Visa Ban. Republic $4,800 - This was a mistake.


supercoolman
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Postby supercoolman » Tue Jul 29, 2014 12:07 am

takeshi will tell you from below!

MemberSince99
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Postby MemberSince99 » Tue Jul 29, 2014 6:36 am

You are correct. What you are describing is called utilization, with all due respect to Takeshi. Plus 3 cards is said to be the "sweet spot" for the highest credit score.


I suggest leaving a Visa open as Discover and Amex are not accepted everywhere plus it has a nice limit and that 3 cards should give you your best possible score. If you really want to close it, consider maybe another card instead that works for you.

Darrvao777
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Postby Darrvao777 » Tue Jul 29, 2014 11:48 am

MemberSince99 wrote:You are correct. What you are describing is called utilization, with all due respect to Takeshi. Plus 3 cards is said to be the "sweet spot" for the highest credit score.


I suggest leaving a Visa open as Discover and Amex are not accepted everywhere plus it has a nice limit and that 3 cards should give you your best possible score. If you really want to close it, consider maybe another card instead that works for you.


Interesting, never realized 3 cards is the sweet spot for a credit score

Any rationale for that? Thanks!
- Fidelity Visa
- Citi Double Cash
- Amazon Prime Store Card

MemberSince99
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Postby MemberSince99 » Tue Jul 29, 2014 4:33 pm

Things I've read explaining the scoring including some from FICO if memory serves me, plus anecdotal hearsay from others (nothing that would be admissible as evidence in a court of law). I think it's at LEAST 3. But of course it's always YMMV as there are many factors that weigh in. Still if I was shooting for my top score I'd want to have 3 from what I've read. It's possible you could have people with only 1 card have over 800 scores if everything else is there - my mom doesn't have a single card and has over 800 but she has long history and a mortgage. So, you don't need 3 cards to get a great score, it's just I've read that all other things being equal that's the sweet spot to have at least 3.

Jessetaylor
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Postby Jessetaylor » Tue Jul 29, 2014 9:44 pm

Appreciate the info Member.

As far as canceling cards, how does shutting down a $0 card affect one's credit score?
AMEX Premier Rewards Gold
Chase Sapphire Preferred $9,000
Discover $6,000
Visa Ban. Republic $4,800 - This was a mistake.

supercoolman
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Postby supercoolman » Thu Jul 31, 2014 12:19 am

takeshi is on vacation these days?

closing a $0 balance card only lowers your total available credit and debt to credit ratio. from your info, that's nearly half of you total credit.

papelet
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Postby papelet » Sat Aug 02, 2014 8:09 am

The card has no fee, it's way more accepted than the other 2 and it's helping you keep your utilization low.
Unless you apply for another visa or MC and you get approved for that same amount just keep it, even then I would still keep it.
Btw the card should have a reward program, if you shop at banana then you can take advantage pot that
[B]Cards:
1st. Express NEXT --------------$1,990
2nd.Cap1 Platinum MC ---------$3,250
3rd. Discover IT -------------------$5,600
4th. CSP Visa Signature --------$13,000
5th. Citi TY Pref World MC ------$5,900
6th. Freedom Visa Signature ---$7,900
7th. Amex Blue Cash Everyday-$18,000
8th. Barclays Arrival+ WEMC---$13,000

MemberSince99
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Postby MemberSince99 » Sat Aug 02, 2014 3:29 pm

Jessetaylor wrote:Appreciate the info Member.

As far as canceling cards, how does shutting down a $0 card affect one's credit score?




Exactly the same way a card with an annual fee does. Makes no difference in terms of what it does to your score.

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Vattené
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Postby Vattené » Sat Aug 02, 2014 11:48 pm

papelet wrote:Btw the card should have a reward program, if you shop at banana then you can take advantage pot that


I have a Banana Republic Visa, too (also through shady means, but it introduced me to rewards programs through credit cards which led to my getting a better card). The rewards program isn't great, unless you spend a lot at Banana Republic, Gap, or Old Navy. You basically get 1% back to spend at their brands (in $10 increments) or 5% when you use the card at their brands. Even if you want to use your rewards at Banana Republic, you may well be better off using your Discover card and getting a $25, $50 or $100 gift card by redeeming $20, $40, or $80 in cash back, respectively.

I completely agree that you are better off keeping the account open and the card in the sock drawer (it's not costing you anything after all), but you would have to spend a lot at Banana Republic to justify using it.
-Vattené
FICO-8:
EX - 827 (4/17) | TU - 812 (4/17)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now



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