CREDIT NEWBIE!!!! Would closing secured card negatively affect my credit?

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kissmet_15
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CREDIT NEWBIE!!!! Would closing secured card negatively affect my credit?

Postby kissmet_15 » Sat Mar 14, 2015 12:14 pm

I recently opened a capital one secured card (My 1st credit card ever...woohoo!) at the end of November (credit limit of $200) and within 2 weeks, they sent me pre-approval for a platinum card ($500 limit). I wish I could've been notified that I didn't require a secured card, but oh well...
A month later, I received notification that I would get an automatic limit increase in August (from $500 to $750) if I made all payments on time.
So I've been using them both every month, I make sure to keep my usage on both below 10% and pay the full balances as soon as I receive my statements.

My beginning credit score was 548
My current credit score is 612
My Goal 750

My question: Would closing my secured card in August (IF cap1 really does increase the credit limit on the platinum from 500-750) negatively affect my credit?
Also, if anyone has any advice on better cards after I've made a decent attempt of building credit, I would be very grateful.



Thank you.


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ScoreOnTheRise
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Postby ScoreOnTheRise » Sat Mar 14, 2015 5:26 pm

Since you opened both within two weeks of each other, your AAOA really wouldn't change if it's just these two. It depends on the number of cards and age of the cards you have in total. Do you have any other credit cards?
American Express PRG [NPSL]
Chase Sapphire Preferred [$25K]
American Express BCE [$20K]
Discover it [$18.5K]
Barclaycard Arrival World MC [$6K]
Citi Diamond Preferred MC [$4K]
Citi Home Depot Consumer Credit Card [$3K]
Citi Best Buy Visa [$2K]

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obxfisherman
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Postby obxfisherman » Sat Mar 14, 2015 5:28 pm

Yes, it would. While secured cards aren't that great, they are necessary to start out in some instances. In fact, thats how I started out. Having two cards to begin your credit history is good. In the future you can close them when you get further along the credit train. So for now keep both, to keep building.

Now regarding other cards I would apply for if I were you. I would apply for any card issued through GECRB, well they aren't called that anymore, but I mean apply for a card from either Walmart, Lowes Home Improvement, Amazon, Marathon Fuel. etc. A full list of cards issued by them can be found online. I would apply for their "store" cards, ones that don't have a Visa or MasterCard logo. These are easier to get. The cool things is they are unsecured, but their interest rate is crap (like 25%) so don't put a balance on it. They are generous with credit line increases over time, and they are good starter cards...I'm not the best example but that's how I started....I'm 20 now, had credit for like 2 years, and look at all my limits now (see signature). I wouldn't apply for the store cards right away though...I would wait a little bit, perhaps when that Credit Line Increase comes along.. Let me know if I can be of further assistance.
Cards Currently In My Wallet(See Avatar)
Chase Marriott Rewards Visa Signature (Daily Purchase): 13.4K
NFCU Visa SignatureCash Rewards: 5K
Sheetz Discount Card 3c Off PerGallon Of Gas Everyday

Total Credit Card Limits Roughly: 61.5K

kissmet_15
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Postby kissmet_15 » Sun Mar 15, 2015 5:22 pm

ScoreOnTheRise wrote:Since you opened both within two weeks of each other, your AAOA really wouldn't change if it's just these two. It depends on the number of cards and age of the cards you have in total. Do you have any other credit cards?


Nope, I have no other cards.

kissmet_15
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Postby kissmet_15 » Sun Mar 15, 2015 5:23 pm

obxfisherman wrote:Yes, it would. While secured cards aren't that great, they are necessary to start out in some instances. In fact, thats how I started out. Having two cards to begin your credit history is good. In the future you can close them when you get further along the credit train. So for now keep both, to keep building.

Now regarding other cards I would apply for if I were you. I would apply for any card issued through GECRB, well they aren't called that anymore, but I mean apply for a card from either Walmart, Lowes Home Improvement, Amazon, Marathon Fuel. etc. A full list of cards issued by them can be found online. I would apply for their "store" cards, ones that don't have a Visa or MasterCard logo. These are easier to get. The cool things is they are unsecured, but their interest rate is crap (like 25%) so don't put a balance on it. They are generous with credit line increases over time, and they are good starter cards...I'm not the best example but that's how I started....I'm 20 now, had credit for like 2 years, and look at all my limits now (see signature). I wouldn't apply for the store cards right away though...I would wait a little bit, perhaps when that Credit Line Increase comes along.. Let me know if I can be of further assistance.


Thank you for your advice!!!

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otter
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Postby otter » Sun Mar 15, 2015 7:48 pm

How I got (re)established... I had avoided credit for years so kind of started with a "clean slate" (although I had the advantage of an account never reported as closed on Equifax and later benefited from Amex backdating).

Started with Wells Fargo and BoA secured cards $300 each. A few months later, got a Discover card and a few GE cards(PayPal and WalMart Discover- which is now a MC I believe). Six months after that I got an Amex charge card and the Chase Freedom. Also got a $10000 credit union card and decided the secured cards were not needed anymore. That all started in July 2013, so you can quickly establish credit quickly especially if you have enough income.

I would keep the secured card open for now since you've already paid the annual fee, but jettison it as soon as you can. Closing cards doesn't hurt your credit score as it relates to average age of accounts since it will still report for ten years, but it might hurt your utilization which is a bigger part of the score. Once you start getting cards which dwarf the secured card limit... I would get rid of the secured card.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450

takeshi
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Postby takeshi » Tue Mar 17, 2015 8:18 am

kissmet_15 wrote:My question: Would closing my secured card in August (IF cap1 really does increase the credit limit on the platinum from 500-750) negatively affect my credit?

All depends on how it affects your utilization. Do the math to determine.

At least 2-3 cards are generally recommended for scoring purposes. Don't close the secured card unless you already have 2-3 unsecured cards.

kissmet_15 wrote:Also, if anyone has any advice on better cards after I've made a decent attempt of building credit, I would be very grateful.

Better is always highly subjective. If you want recommendations you'll need to clarify exactly what you're looking for.

ScoreOnTheRise wrote:Since you opened both within two weeks of each other, your AAOA really wouldn't change

AAoA isn't immediately impacted by closure.



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