Credit Score & Cards Question!?

Question

I’m a 20 year old college student with amazing credit for my age. I have an Amex & Visa which I always pay in full. I have 2 store accounts a Macys which I opened for 1 purchase and an Express Card which I opened about a year ago and closed today since I only used it twice. My question is because I will never use the Macys account, after I pay off my bill when can I close it so it doesn’t ruin my credit. Also, if I want to change my Amex & Visa for other Bank Credit Cards when should I do so? I want to keep a good clean history. Will checking my credit report myself mess it up?

Answer 1

Closing an account that has good payment history can damage your FICO credit score in 3 ways. Closing an account can never help your score, it can only hurt it. If you have the dreaded Universal Default clause in your Terms and Conditions (i.e., the fine print) of any credit card, and you close an account with bank A and cause a drop in your credit score, that can set off the Universal Default clause at Bank B and send your interest rates soaring for Bank B's card.

First, 30% of your score is about how much of your credit limit you're using. They score each individual account, and they score your total balance compared to your total credit limit. You want to keep balances below 30% of your limit, else you risk hurting your score. So on that paid off card, if you close it, you don't change your total balance (total balance minus 0 = same balance) , but you DO drop your total credit limit, and this causes your total utilization percentage to rise. I've read several posts online from people who have tripped their Universal Default clause this way, even though they've never been late with payment.

Second, 15% of your FICO score is for length of credit history. You can continue to score more points here for at least 99 months (at least 8 years, 3 months) by keeping your oldest account open. Look at your credit report and you'll see the number of months reported. Keep the account open for the one that shows the most months reported.

Third, 10% of your FICO score is for credit mix, the types of credit you use. The good ones are mortgage, major credit card (MC,V, AE, Disc), department store card (Macy's, e.g.), secured auto loan. The bad ones are payday loans, personal finance lines of credit, and overdraft loans. Close out all your store cards and you'll shrink your good credit mix, which is bad. Ideally, you want one open account in each of the four types of good credit.

Checking your own credit history is a "soft" inquiry; it does not hurt your score.

If you change those Amex & Visa for other major cards, you'll temporarily hurt 10% of your score - number of hard inquiries - for each new card you open. The inquiry stays on your report for two years, but the older it gets, the less damage it does. The damage for a card or two is small, a few points. If you aren't planning a major, secured loan purchase (car, home), get the new cards asap, and get those nice rewards. If you are planning a major secured loan, apply for the new cards AFTER your mortgage/car loan deal is closed.

Please vote: did this help?

Answer 2

I've posted two websites that sort of conflict with each other on the answer. I do know that applying for a lot of different credit cards hurts your score. My credit report shows two closed cards that I closed a couple years ago and my score is 760 so it didn't hurt me too much but I only have 2 open cards to my name. I don't have any store cards anymore, just a Visa and an AmEx.

Be a bit careful transferring balances and opening new accounts. People do that all the time trying to get better deals but all that moving around shows up on your credit report and can hurt you. Decide what cards you need and stick with those.

Checking your own credit report does not hurt you. As long as you are paying your bills on time and keeping your total debt low, you should be fine. It sounds to me like you're doing a hundred times better at handling your money and credit than most 20 year olds are.

From MSN Money --

Don't close old, paid-off accounts
We used to tell people to close accounts they weren't using. Now here's the word from direct from Craig Watts, an executive at Fair Isaac & Co., one of the leading credit scorers: "Closing accounts can never help your score, and often it can hurt."

This knowledge is frustrating to those who want to simplify their lives and reduce the opportunities for identity theft by closing unused accounts. But credit facts are credit facts.

Shutting down credit accounts lowers the total credit available to you and makes any balances you have loom larger in credit score calculations. If you close your oldest accounts, it can actually shorten the length of your reported credit history and make you seem less credit-worthy.

Answer 3

First, no checking your own credit will not "mess up" your credit. Try AnnualCreditreport to get a copy for free.

Closing your Macy's card is a great Idea. Don't leave it open just because of your score or anything else.

Now Changing your Amex and Visa may have an adverse affect on your credit. by closing your oldest trade lines you could be closing some of your best credit records. If you are trying to get a better rate call the card companies and ask them to lower your rate. Or if it is for convenience then consider only doing one of your cards.

To truly know how your credit will be affected I recommend going to a web site that offers a simulator on your credit score. myFico.com is the scoring systems own website. go to purchase and get the one with the simulator. Or if you do not plan on using your credit any time soon the make the changes and know your score will go down a little then right back up if you continue to use credit wisely.

Good Luck

Answer 4

Some people recommend keeping older lines of credit open (even if you don't use them) since they have a positive impact on your credit score. But the more open lines of credit you have, the more chances that someone can steal your information and ruin your credit standing. Do you really want someone to gain access to your old accounts and run up charges without you knowing it? Of course, you're protected from 'unauthorized charges'-- but it could take a long time to get everything straightened out-- plus, it could be a HUGE hassle!

Closing open accounts will not RUIN your credit. It might have a slightly short-term negative impact-- but in the long run, it would be better to get rid of the cards you don't use. If you aren't planning on taking out a mortgage in the next year or so, I would recommend closing the old accounts and only keeping cards you use / need.

If you want to switch credit cards, feel free to do so. Just give yourself enough time to establish some history with the new company before you plan on making any BIG moves.

Hope this helps!

Answer 5

No, it won't. You get a free credit "pull" every year. Closing the Macy's account won't hurt either. It also doesnt hurt to keep it open. I would keep it open and maybe buy something little every once in awhile, something you can pay off at the end of the month or the next. Credit's a tricky thing. You either have too much or too little. I would definitely check out www.creditalk.com for more information on how to keep your credit in good standing. Sounds like youre doing a good job staying on top of it. Good for you! Wish I had when I was your age. Good Luck to you!

Answer 6

Developing a history on top staying away from the 30, 60, 90 day late notice is crucial in a credit report. Creditors keep records of all accounts, closed or open. Personally contacting the creditors is always a good thing. Inquiries fall into two categories some affect a report and some don't. Contact them and learn.

Answer 7

There isn't a "right" or "wrong" time to close an account in good standing. The keys to watch are your credit utilization ratio (balances:available credit) and closing accounts that have been in good standing for a long time. Changing cards shouldn't be an issue, either, unless you respond to every offer in the mailbox. Again, time isn't an issue.

To check your credit yourself, remember you are entitled to one report each year from the 3 major credit bureaus. Some companies do offer "credit protection" services for a fee, but doing it yourself is FREE. The FTC set up a site- www.annualcreditreport.com- just for consumers to keep up on their credit.

Answer 8

You are better off having a credit card show on your report that its paid in full, then one thats showed you closed it. You really should leave them open to show credit card companies that you can have cards with no balance on them and that you are responsible enough not to run all your cards up. Keep the one you have now open. Everyone has the right to check whats on their credit report to make sure its correct, so know it wont ruin your credit.

Answer 9

I don't believe closing a credit card hurts your score. Neither should moving one balance to another credit card.

Having too much in available credit can be bad for some scoring.

You are definitely able to pull your credit report without hurting your credit score.

Answer 10

Don't close accounts, they add to your score. Make sure to charge something every 6 months no matter how small to keep your scores up. Never close accounts!! They do not bring down your score. Hope this helps.