2014 Impact on Cancelling Credit Cards on Credit Score?

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rohnin
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2014 Impact on Cancelling Credit Cards on Credit Score?

Postby rohnin » Tue Nov 26, 2013 9:53 pm

I have about a dozen cards and want to simplify. If I canceled two or three of them would it hurt my credit score?


Midori
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Postby Midori » Tue Nov 26, 2013 10:10 pm

It would immediately hurt your available credit. For example, if you have $50k between 12 cards, and canceling three of them brings you down to $25k, you've just halved your available credit. Likewise, if you have $50k between 12 cards, and canceling three of them brings you down to $45k, you haven't dinged yourself too much.

The cards continue to report towards your AAoA for 10 years after closing, then fall off. So say you've had those three cards for 5 years, 2 years, and 1 year when you close them. They'll continue to age and report, but in 2024, you'll suddenly lose a 15-year-old card, a 12-year-old card, and an 11-year-old card from your Average Age of Accounts.

takeshi
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Postby takeshi » Wed Nov 27, 2013 7:51 am

You can calculate the change in utilization (balances/credit limits) to give you an idea.

MemberSince99
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Postby MemberSince99 » Wed Nov 27, 2013 8:06 am

There is no way we can possibly answer that not knowing your situation. It's like asking "I want a Gold card would Amex approve me?" Um, hell, I don't know your guess is better than mine.


Anyway rules of thumb are the older your accounts the more it boosts your score so closing older accounts probably will hurt your score. But if they are Cap One 200 limit cards that will never grow and you have a lot better maybe the loss of age in your accounts is made up for by an overall higher average limit.


So just asking that it's absolutely impossible to even guess. I say if you want to simplify, and are sure you don't want some of those cards then close them and any hit to your score can and will be made up over time anyway. Unless you are going for a mortgage or something, not sure it really matters. But again I know nothing of your situation so I have no idea at all.

Obi-dan
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Postby Obi-dan » Wed Nov 27, 2013 9:29 am

Credit Karma has a simulator and you can see what different actions could "possibly" do to you score. Obviously only God and FICO know for sure.
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rohnin
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Postby rohnin » Thu Nov 28, 2013 5:17 pm

okay i see. i want to cancel a $900 limit Citi HHonors card i've had for about 3 years, so it shouldn't hurt much i guess. i don't know how to figure my no-limit AMEX Platinum though

flan
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Postby flan » Thu Nov 28, 2013 9:11 pm

Obi-dan wrote:Credit Karma has a simulator and you can see what different actions could "possibly" do to you score. Obviously only God and FICO know for sure.


The score that that credit karma gives you does not take into account closed accounts. So closing an account will give you a more negative movement than it does under the classic fico models, which don't distinguish between closed accounts and open ones.
In the classic fico system, the only real impact is that it changes your utilization. In the private models used for other things, it's probably somewhere in between. No one really cares about old closed credit cards (unless you failed to pay, of course!) but one you just closed is interesting. The other impact (in other-than-fico-models) is it reduces your credit to income ratio, which most lenders would consider favorable.



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