Should you cancel store credit cards?

Where you can talk about store credit cards, like gas station cards, department store cards, etc.
15 posts
Crashem
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Postby Crashem » Fri Apr 06, 2012 10:35 am

Money Card,

You really need to learn more about how FICO scores are calculated. Its a formula and not some person looking over your shoulder. Ask any credit expert and they will say NEVER close a card unless there is a reason outside of lack of use (annual fee, etc.). In the case of the original poster, I can say for sure it will harm his FICO score. I just don't know how much. You don't ever seem to refute this. You just say over and over that a non used Zales card must be bad with no basis. Also, do you understand how credit reports work? The Zales card will be on his credit report for a long time to come whether or not it is open or closed. Even if I buy your argument that a person looking over the credit report has some beef with Zales, the only difference the underwriter would see is that there is an open or closed Zales card. Does that really buy you any credibility with underwriter? Thank God this applicant has better taste in jewelry now and closed that awful Zales account.

In any case FICO score wise, he can be harmed heavily:

1) Utilization: He only has one other revolving credit line: Chase. If limit on that card is 1k too, he would decrease his overall revolving line by 50%. Whatever the percentage, a reduction hurts if any cards report a balance (which they often do even if you PIF). Utilization is 30% of FICO score and you can lose 100 points easy from this.

2) AAoA: Do I need to repeat myself here? Also a big FICO factor at 15%.
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Money card
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Postby Money card » Sat Apr 07, 2012 1:04 am

Gee I wonder what a expert would say if I asked this question. The Zales card has no annual fee if somebody has the card and is not using it at all. Does this look good? Let's say I explained to him this is their oldest card but only 2 years old.

Unless somebody makes a lot of money where they can afford to go there all the time, this is not good. They could go broke.

Crashem when you think of a regular store card, you think of stores like J Crew or Walmart. However Zales is a jewelry store which can be expensive. For zales it looks better to be closed, Macy's would be a very different situation because It is an affordable store that can be regularly used.

Crashem
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Postby Crashem » Sat Apr 07, 2012 9:39 am

Money card,

Don't want to keep going back and forth as we are running in circles here. Can you explain why fico score wise how closing this account isn't a mistake? I think I laid out why I think it will hurt. Don't try to "reason" it through. Fico is a formula so try and base the reasoning by the formula of which there may be honest disagreement on what it would do.

In a more holistic approach, either someone has a good and deep credit file and no one will care if they had a zales card first or their file is thin and/or bad and they need all they help they can get. I get what you are trying to say holistic wise but there are tangible harms in closing this card. Unless this poster is scared he is going to misuse this card, I would file it away and do nothing
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Money card
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Postby Money card » Sat Apr 07, 2012 9:50 pm

I closed out my second oldest card which was the chase Freedom it had no annual fee.

I first started out with a bank called First card, they put on my card member since 1995 which was my second oldest ( My Exxon Mobil charge card version is my oldest 1994) I always paid my bill on time, when they closed down there bank, Bank1 took over in 2001 I continued to pay my bill in full and on time just like First card. they left my member ship date on that card, from what I was told around 2005-2006 Bank 1 meged with chase So now I have a Chase platinum card, always paid my bill in full and on time.

in August of 2010 after my chase platinum card expired I was sent a rewards card with a letter stating, they appreciate my business but they were going to be sending me a chase Freedom in a few weeks, the rewards card had my membership date of 1995 on it.

when I got the Freedom card i activated it, But I called on the rewards card and asked them which card I should use the Rewards or Freedom, the account mgr said to use the Freedom card because the rewards card would be expiring soon not yet she explained but soon.

when I looked at both cards there was something wrong they didn't put my membership date on the Freedom. So I called on the Freedom and the account mgr explained with the new Freedom cards they took off everybody's Membership date I asked if there was anything that can be done and he said I can write a letter , so I did I explained everything in the letter, I didn't get the response I was looking for.

So that day I picked up the phone and CANCELED MY CARD. even though I just had the Freedom for about 2 months I had that account number and different banks through the years. as I said I canceled my second oldest card.

Now I have a capitol1card. A Discover since 1998. in October I applied for a Green American Express card and was approved.

I think if I can cancel my chase which had a membership date of 1995 and then get a premium green card.

I think it would be ok for the original poster to cancel his zales and he would still be fine with his fico score.

there is no harm in closing out a jewelry card whether it be Torneou, Littmans or zales , the card isn't doing anything for him/her

If it was a Lord&Taylor, J crew or Talbots then I would agree you can file it in a souvenir wallet.

my second oldest card goes back to 1995 , this persons oldest card goes back 2 years ago.

Crashem have you ever canceled a card?

through the years I canceled My First fidelity, Mba Mastercard and chase.

My kohl's, Lord&Taylor and Disney all deactivated. they were all charge cards. My Disney wasn't the chase visa credit card.

so have you ever canceled a card? not including if it has/had a annual fee? a different reason?

Crashem
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Postby Crashem » Sun Apr 08, 2012 11:33 am

Money card, your history is deeper than the original poster so you feel the effects of card closure less significantly. My point still remains. There is no negative effect of keeping them open. The fact is that your credit would likely to be stronger if you had not closed all your cards over your history.

I have closed tons of cards over the years. If I knew what I do now, I wouldn't have closed a bunch of them. I have a bunch of closed older accounts, a few open old accounts, and a few new open accounts. I now have to watch which new ones I open because my AAoA will be significantly hurt if the old closed accounts drop off. If I left some of them open, I wouldn't have had to worry about it. Thank god for Amex backdating.

I really think you need to get over who the lender is. The fico scoring system has no mechanism to weigh one lender over another. It's all numbers to it. I do agree about closing older cards who aren't growing with you, but really just in terms of limits. And you only do this once you have deeper credit history. The main reason is that some lenders determine new limits by average of other card limits
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