Question
I've seen discussions and some conflicting advice on this in a few threads, but can't find any threads that focus specifically on the following questions, so I thought I'd ask.
I have numerous credit cards and may yet get a few more. Thanks to my efforts, my wife also has several of her own, and may get a few additional ones as well. (Yes, I'm aware that Amex and Chase no longer offer bonus sign-up points/miles for the second card, or at least for the third card for those companies that let you have both personal and business cards.) Our credit scores are both about 800 and we always pay off our entire balances on time. I just want to cut back for the sake of record keeping and because we don't like having unused cards, even without annual fees.
1. So my basic question is: Which, if any, is the best way of canceling cards without taking a hit on our FICA scores?
2. More specifically, if I have multiple cards affiliated with the same company (e.g., Starwood), should I cancel the newer cards and ask the company to combine the credit limits into the remaining card? If I recall correctly a previous thread/post that I now can't find, that was that advice--it keeps your credit availability high, which is a good thing. Is that correct?
3. If I have cards affiliated with different companies but issued by the same bank (e.g., Chase), and if the advice I state in #2 is correct, should I also ask to combine credit limits across affiliations if I close a given card? Or is that mixing apples and oranges?
4. Is it better to cancel the unused cards all at once, or gradually over the course of months, or does it not make a difference?
5. If I only have one card affiliated with a given company (e.g., Continental) and I never use it, do I take a FICA score hit by closing it and therefore is it best to keep it even if I don't use it?
6. Any ramifications of closing some cards even as I'm obtaining new ones?
Any related advice would be welcome. Sorry if I'm not using the precisely right terms in describing this stuff. I hope my questions are clear enough anyway.
Answer
With a credit score of 800, you're worried? Are you buying a house or something soon?
Generally, if you're opening up a lot of credit cards, you want to do it in a short amount of time. Don't know about closing them.
You will want to keep your oldest cards open, though. The length of credit history is important.
If you ask this around fatwallet.com, they will probably know more-they sound like your kind of people, too.
Answer
Consolidate the credit lines and then close the newest but only about 1 a month on average.
Answer
I'd actually close the cards with the least credit line. Think old store credit cards that are still out there. If you're really serious pay the $20 for a full Fico report. It will show you the exact reasons your score is below a mythical perfect score. Most likely?
1) Too many inquiries in a year.
2) Too many open accounts.
Answer
There are various factors to consider. This has been beaten to death by Fatwalleters!! Anyway points to remember:
1) If you have too many 15+ start consolidating from the newest ones and get rid of all the store crap, as lots of accounts esp unused ones are generally closed by issuers (you might aswell get the credit moved!)
2) Even if new keep a set of cards that you absolutely love / use
3) Close the cards that you donot use but pay an annual fee (may be your continental)
4) If you replace the cards slowly i *think* would be better than all of them at once. Length of credit issues
5) Secondly if you are applying for a lot at once you will get lots of cards that you donot want (& you will be back to square one!) :p
6) Few of the companies allow you change the type of the card. Ask them if they will convert the account from say chase freedom to chase united or some thing like that.
7) Donot over consolidate. Based on your salary 25K -50K per card is generally the limit. (after which credit pulls/paper work start!)
8) try www.creditcardtuneup.com, If you are paying in full stick with rewards cards and cut the no rewards stuff (unless it is a credit union card).
9) More than 10 cards at any point of time esp with out balance is simply difficult to manage (ofcourse now a days amex/chase/BoA have a nice feature where you can see all the cards at once!) ...
10) 3-4 current +5 back up should be more than enough - probably distributed accross all the issuers Amex, Citi, chase & BoA (optional!!!!)
11) Credit score above 775 will have negligible impact on your interest rates
12) <10 enquiries per 2 years will hardly impact your score so 1 per quarter is a good bet ... stay away from cap one they pull 3 per application.
Answer
creditboards.com would be a good place to learn more I hear. I am also considering some cancelations as well. My wife and I have scores in the 700s and we are about to pay off some big home loans, and we have no CC debt at each month's end now. (We have but we do not now)
We think the scores will go up in a month or so when these things start to take affect.
She no longer really needs her UA Chase UA visa and actually I had been on hers as the joint user and it was primarily in her name but now has an annual fee because we have had it around for 2-3years. That means I could sign up for one and get a bonus. If we want UA miles we could always transfer in SPG points, but 25k +5k EQM is still pretty decent.
I have several bank accounts but only 4 CCs now.
I am wondering how much of an affect it should have on our scores and since we are going to pay off loans anyway, it may not matter. This is a good thread and I will be listening/watching/learning/chiming in.
:)MM