Question
I am bombarded with enticing offers of sign up bonus miles from various airlines and hotel programs. In the past I would sign up for the no annual fee CC, bank the points and miles then close the account after the 1st year and move on to another airline or hotel. I often re-applied to get those points/miles a few months later when sent the invitation again.
I was wondering, does anyone out there know if opening and closing these accounts have a significant impact on your credit rating? I pay off each CC in full each month, have no outstanding debt whatsoever (except the mortgage) and do maintain a couple of cards (with no fee) to show long term positive credit history.
Bottom line....can chasing the sign up bonus points hurting me financially? Appreciate all input? :confused:
Answer
I may as well be the first of many to tell you to do a search, as this has been discussed countless times in countless threads. And there has been no real concensus as far as I know.
Answer
I may as well be the first of many to tell you to do a search, as this has been discussed countless times in countless threads. And there has been no real concensus as far as I know.
Thank you Chuckd - I am new to this site and only posted a couple of times.
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Thank you Chuckd - I am new to this site and only posted a couple of times.
Yes. It can hurt your credit in several ways:
1. Type of Credit
2. Number of Inquires
3. Age of Accounts
See the following articles:
http://www.credit.com/slp/chapter11/Step5.jsp
http://www.credit.com/slp/chapter11/Step6.jsp
Answer
....I was wondering, does anyone out there know if opening and closing these accounts have a significant impact on your credit rating? ...Bottom line....can chasing the sign up bonus points hurting me financially? Appreciate all input?
First, you should check your current rating. If it is high, you can play the "bonus points game". If it's a little low, stay away.
I have done some "opening and closing of accounts", and my credit rating has not dropped, it is still (very) high.
Added: The offers in the mail are often not the best deals. You better check for better (best) deals on the internet.... like HI/Interconti, they have a 15,000 points deal out, but I found a 30,000 points deal!
Answer
It definitely hurt my score. Even though I am an excellent credit risk, I was surprised to find that my FICO score was only around the 70th percentile because I chased too many bonus offers. I stopped; in a few years my score went up to over 800 (95th percentile). (With Citibank, I was able to switch from an existing AA card to a cash back card; and with Amex from a Hilton card to the Starwood card, without having them treated as new applications.)
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First, you should check your current rating. If it is high, you can play the "bonus points game". If it's a little low, stay away.
I have done some "opening and closing of accounts", and my credit rating has not dropped, it is still (very) high.
Added: The offers in the mail are often not the best deals. You better check for better (best) deals on the internet.... like HI/Interconti, they have a 15,000 points deal out, but I found a 30,000 points deal!
I opened 4+ cards in 2006. Today I got my new score for $5.95 from Experian:
Credit Category = Super Prime .... higher than 99.10% of US consumers..
That was the new VantageScore ... developed jointly by the three credit bureaus.... so, no more different scales.
Bottom line: The fear regarding falling credit ratings due to many credit cards is a myth...I believe, when somebody has a good or excellent rating, credit cards don't matter a lot. Now we have the proof!
Get a free credit report and pay a little for the credit score... you can do this 3 times a year (=3 credit comp. ;) ):
https://www.annualcreditreport.com/cra/index.jsp
Answer
I opened 4+ cards in 2006. Today I got my new score for $5.95 from Experian:
Credit Category = Super Prime .... higher than 99.10% of US consumers..
That was the new VantageScore ... developed jointly by the three credit bureaus.... so, no more different scales.
Bottom line: The fear regarding falling credit ratings due to many credit cards is a myth...I believe, when somebody has a good or excellent rating, credit cards don't matter a lot. Now we have the proof!
Get a free credit report and pay a little for the credit score... you can do this 3 times a year (=3 credit comp. ;) ):
https://www.annualcreditreport.com/cra/index.jsp
This is weired stuff. I dont get it. Something is wrong somewhere. I and my wife both opened 4+ CC this year so far and my credit score is as follows:
Credit Category = Super Prime .... higher than 99.10% of US consumers
while my wife's score is as follows:
Credit Category = Prime Plus.... higher than 83.90% of US consumers
We have almost same accounts. Everything is same.
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We have almost same accounts. Everything is same.
Nothing is same, for starters, gender. Although FTC bans the use of race, gender, etc in condisering credit worthness, the credit score itself could take gender into consideration, after all, it's a score based on statistics models.
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Careful....the scores cited by the last few posters are not true FICO scores - they are not used by credit granting agencies. Get your score from www.myfico.com - it costs a bit more, but is the real thing. (There may be coupons that will save you money on www.myfico.com on the credit chat boards.)
Answer
Careful....the scores cited by the last few posters are not true FICO scores - they are not used by credit granting agencies. Get your score from www.myfico.com - it costs a bit more, but is the real thing. (There may be coupons that will save you money on www.myfico.com on the credit chat boards.)
I agree
the original question opening and closing credit cards for miles
Think in past discussion that there really no direct answer you will get.
always make sure that if you do close you acct they are closed at your request.
I closed one of my cards a few years back and the agt stated bank closed it. after 3 months of back and forth with the company. I got them to send me a letter and correct the credit bureau.
I never used the acct, and decrease teh credit line on it 2 times from the time it was open.
But in my opinion it can hurt you in the long run
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Careful....the scores cited by the last few posters are not true FICO scores - they are not used by credit granting agencies. Get your score from www.myfico.com - it costs a bit more, but is the real thing. (There may be coupons that will save you money on www.myfico.com on the credit chat boards.)
I believe YOU ARE WRONG...and may talk to you bank, lender ...
Read here http://www.experian.com/consumer_online_products/vantage_score.html
See the same type of information that lenders and creditors see before you apply for credit, with Experian VantageScore
You could save money by having the information you need to negotiate better rates on your next home loan, refinance, car loan or credit card
Receive detailed explanation of the important factors that could impact your credit score
Order it for only $5.95 or call us toll-free at 1 888 322 5583
What is VantageScore?
It’s the credit industry’s first credit score developed jointly by Experian, Equifax and TransUnion. This innovative new approach to credit scoring simplifies the credit granting process for consumers and creditors by providing a consistent, objective score to the marketplace. VantageScore is easy to understand and apply. It uses score ranges from 501-990. Consumers and credit grantors alike will recognize the following logical score groupings that approximate the familiar academic scale:
A: 901-990 (Super Prime)
B: 801-900 (Prime Plus)
C: 701-800 (Prime)
D: 601-700 (Non-Prime)
F: 501-600 (High Risk)
Answer
Nothing is same, for starters, gender. Although FTC bans the use of race, gender, etc in condisering credit worthness, the credit score itself could take gender into consideration, after all, it's a score based on statistics models.
Not true. Mrs. USAFAN and I applied for the same CCs, loans....etc.
And the scores are the same = Super Prime
Answer
This is weired stuff. I dont get it. Something is wrong somewhere. I and my wife both opened 4+ CC this year so far and my credit score is as follows:
Credit Category = Super Prime .... higher than 99.10% of US consumers
while my wife's score is as follows:
Credit Category = Prime Plus.... higher than 83.90% of US consumers
We have almost same accounts. Everything is same.
It's a little weird ... you may check both credit histories. However, it doesn't really matter, Super Prime and Prime Plus are great scores. Lenders and insurances will like you and Mrs. maulah ;)
Answer
Not true. Mrs. USAFAN and I applied for the same CCs, loans....etc.
And the scores are the same = Super Prime
Just because one chicken lays a golden egg, does not mean every chicken lay golden eggs.
Answer
Yes. It can hurt your credit in several ways:
1. Type of Credit
2. Number of Inquires
3. Age of Accounts
See the following articles:
http://www.credit.com/slp/chapter11/Step5.jsp
http://www.credit.com/slp/chapter11/Step6.jsp
This is false. What the credit.com pages state is that OPENING A CREDIT LINE AND KEEPING IT WILL INCREASE YOUR SCORE (assuming you are using a lower percentage of credit.. i.e. $1000 on $10000 total credit vs. $1000 on $20000 total credit).
Decreasing your credit line will simply put you back at your starting point, not necessarily hurt your credit score and lower it past what it was when you initially applied for the card.
The only lasting damaging effect is the act of applying for the card itself (i.e. a hard inquiry), NOT the opening/closing effect.
Answer
Just because one chicken lays a golden egg, does not mean every chicken lay golden eggs.
:confused:
Posted by zlc:
Nothing is same, for starters, gender. Although FTC bans the use of race, gender, etc in condisering credit worthness, the credit score itself could take gender into consideration, after all, it's a score based on statistics models.
Now I understand ... you are correct, it's indeed a matter of gender - roosters don't lay eggs at all :D
Answer
Fair Credit Reporting Act
The Fair Credit Reporting Act ensures that credit-reporting agencies are required to provide accurate information and maintain confidentiality by releasing information only to those parties who have a permissible purpose for requesting the information. There are two conditions imposed on affiliate sharing. Those conditions are as follows:
Applicants must be informed of, and given the opportunity to "opt out" of, such sharing of information. When adverse action is taken due to information obtained from an affiliate, the customer or applicant must be provided notice to that effect.
Joint applicants.
Any individual authorized to use the account.
Married applicants who live in community property states or in cases where collateral used to secure the loan is located in community property states.
Non-applicant spouses or former spouses when applicants use their income to qualify for cards. In this instance we must obtain written permission from the non-applicants or former spouses before obtaining the credit bureau report.
Decline for Credit
In the event that Credit card declines the applicant due to the information obtained from a credit report, we are required to communicate the following information, in writing, orally or by electronic communication, to the applicant. The decline decision and reasons for the decline.
The name, address and telephone number of the credit-reporting agency that furnished the report. A statement that advised the applicant that the credit-reporting agency did not make the decisions and cannot provide the specific reasons for the decision of the creditor. Information that explains the applicant can obtain a free copy of the credit report from the credit-reporting agency within 60 days of receiving an adverse action letter. Information that explains the applicant's right to dispute the accuracy or completeness of the information obtained in the report directly with the credit-reporting agency that provided the report.
Credit Bureau Reports and Disputes
In the event that CC Company obtains credit bureau reports, the Bank must have a documented and permissible reason for pulling the report.
In the event a bank error created negative reporting to the credit bureau, the negative reporting must be updated appropriately. The account must be updated to reflect accurate information. All bureaus provided the negative information must receive the updated information.
Upon receipt of a credit bureau dispute from the credit bureaus, we must investigate the claim and provide a response that enables the bureau to provide an update to the Cardmember within the required time frames.
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I believe YOU ARE WRONG...and may talk to you bank, lender ...
Read here http://www.experian.com/consumer_online_products/vantage_score.html
Note this says "same type of information" - not "same information". Trust me - these are not true FICO scores.
Answer
This is false. What the credit.com pages state is that OPENING A CREDIT LINE AND KEEPING IT WILL INCREASE YOUR SCORE (assuming you are using a lower percentage of credit.. i.e. $1000 on $10000 total credit vs. $1000 on $20000 total credit).
Decreasing your credit line will simply put you back at your starting point, not necessarily hurt your credit score and lower it past what it was when you initially applied for the card.
The only lasting damaging effect is the act of applying for the card itself (i.e. a hard inquiry), NOT the opening/closing effect.
I agree with most of this. The hard inquiry only lasts for 2 years and most creditors don't care after 1 year.
This part is speculative: I have read that the blend of mortgage, installment, and revolving accounts matters (i.e. how many of each type of account you have in your file open or closed). However, I tend to believe (based upon my personal experience) that this only affects your Transunion/Equifax/Experian scores and NOT your real FICO score.