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Credit Report Question?

Discussion in 'Off Topic' started by cbzdel, Aug 26, 2015.

  1. cbzdel

    cbzdel Tacoma, WA Member

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    I have had only one credit card for the past 10 years now, and specifically that card have I had had for 12 years now. I have not kept a balance on it in probably 6 years and pay it off monthly. I put everything I can on the card because its was good for air miles. Well I am looking at other cards with cash back deals and such, my card is not looking very appealing anymore.

    My question is, since this is my only credit card and the only card I have had in 10 years what would happen to my credit report if I was to close this card and open a new card with better rewards? I have a very good credit score in my opinion and I would not want to risk jeopardizing that as we will be new home shopping in the next 1 to 2 years.

    Thanks!
     
  2. slimer13

    slimer13 Deer Park Well-Known Member

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    It affects your score a little bit because closing it lowers your total available credit. Not very much though. Either way do what's comfortable to you.
     
    Dyjital likes this.
  3. cbzdel

    cbzdel Tacoma, WA Member

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    So if I opened a new card with a equal or greater credit limit and then close my current card the drop should be negligible?
     
    BoonDocks36 likes this.
  4. DuneHopper

    DuneHopper Douglas County. Well-Known Member

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    You could always keep the other card in the safe and every 6 months buy something small so they dont cancel. Then you wouldn't lose any rating and in fact would increase your score. This is what I do to keep score high and get lower interest rates.
     
    Koda, 66PonyCar, oknow and 3 others like this.
  5. FordOffRoad

    FordOffRoad Salem Active Member

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    Check out creditkarma.com, it's free, minus all the adverts a great place for that kind of info.
     
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  6. AMT

    AMT Vancouver, WA. Gold Supporter Gold Supporter

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    Are you sure this is correct?

    I knew a person who worked in the credit department for a credit card company. They told me that the higher your credit limit, the more of a risk you are. (*Think: the more you can borrow and potentially default on, the more risk you pose to them). They kept theirs at $5K max. Every time they received the notice in the mail increasing their limit, they would call the card issuer and make them lower it back down. They even cancelled a couple cards that wouldn't lower it back down. Yes (no?) they didn't have a card with the company they worked for. They were flyer-mile collectors and loved to fly virtually free.

    Having one or two cards won't hurt your score. Transferring a balance from one to another won't hurt your score. Opening one and closing another won't hurt your score. The only "ding" you'll have on your credit is the new card will show running your credit-report. Won't hurt a thing. Now, start having 5, 7, 10 credit card companies running your credit-report WILL lower your score.

    Good luck with the new home purchase!
     
  7. slimer13

    slimer13 Deer Park Well-Known Member

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    You had me second guessing myself so I used a little Google fu. Google does closing credit cards hurt credit. Tons of info.
     
  8. AMT

    AMT Vancouver, WA. Gold Supporter Gold Supporter

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    huh. thank you for the update. I will have to look into this and make a phone call to my friend.

    not that it will affect me any time soon, but more curious now.

    thanks again
     
  9. ruggdogg87

    ruggdogg87 Tigard Active Member

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    I would leave it open. It's not about the available open to buy. It's about the length of time credit is available. If you close your oldest card it will hurt your credit because you are closing the oldest line of credit. In banks eyes your oldest card would then become the new one.
     
  10. Dyjital

    Dyjital Albany, Ore Flavorite Member Bronze Supporter

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    1: any hard inquiries (from running your report to open a new card) have a small impact on your score. It takes two years for hard inquiries to be removed from your report.

    2: a zero balance is worse than not having a card. The inactivity (payment history) is like the card never existed. Even using it once every 6 months is good!!!

    3: some cards auto cancel after so long without activity. Certain store cards are notorious for that. You suddenly go to use it and it's not active, then they want to RE-RUN your record to re-open an account/card again. No thanks!

    4: keep the card open, don't cancel. You want the total credit to be as high as possible so even if one card has a large purchase made your ratio isn't way off.

    (these are all things I've learned the last two years while rebuilding my history.. I went from a 500-ish and now working to almost 700)
     
    OLDNEWBIE likes this.
  11. OLDNEWBIE

    OLDNEWBIE State of Flux Well-Known Member

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    Keep the old card, use it once in awhile to keep it active. They will eventually cancel it on you if you don't.
    One thing your score is based on is the % of availiable credit you have so a few Cards are good if you keep a low balance.
    That's how it used to be and that's how come I have a great score despite my present low income.
     
    Dyjital likes this.
  12. solv3nt

    solv3nt Portland Well-Known Member

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    I've heard that a % of your score is tied to each account, so the longer that you have an account, them more impact that it will make if you were to close it. I put everything on my credit card each month and pay it in full for each bill. I went for 6+ months not paying my mortgage, and my score only dropped <10 points.

    As you'll find with more research, your credit score is mostly black magic, and partially using it responsibly. Good luck.
     
    Dyjital likes this.
  13. Medic!

    Medic! What just happened? Has eagle eyes. But cant remember what he saw. Bronze Supporter

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    I don't know?

    I'm 48 and never had a credit card. But have great credit.
    I bought 12 new cars and two new houses in the last 25 years.

    My advice would be to cut the dam thing up. And don't get another!
    Live within your means. And save money. You can get buy on a Debit card with Visa logo, so you can rent cars and the like.

    You can still have a fantastic credit score. Without any credit cards.

    If you have a credit card with a$5000 limit. And max it out. That's a big hole.
    Do you know how long it takes to save $5000? Even without interest?
    I do. That's because I did it many times over. I have no need for a credit card. Or paying interest.

    Neither will you!

    And I didn't make big bucks. Just simple living. And saving.
    Why is saving your money first then spending it. Such a bad thing?
     
    BoonDocks36 likes this.
  14. teflon97239

    teflon97239 Portland, OR Well-Known Member

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    As long as there's no annual fee to have a credit card, and you have the self-control to seldom use it (and pay off the total balance immediately), it's a good idea to keep a card or two on hand when real life serves you a steaming sh*t sandwich (like major vehicle failures on the road, emergency travel, and urgent home/appliance repairs all at once).

    You'll notice those are all needs. The problem with most Americans in avoidable serious debt is the self-indulgent mentality of getting whatever frivolous new stuff they want - right now.

    The very fact that you're concerned about maintaining a good credit rating and investing in a home probably means you can weigh your priorities beyond some shiny new toys you can't realistically pay off anytime soon.
     
  15. Greenbug

    Greenbug Bend Well-Known Member

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    Don't close any credit accounts, it negatively impacts your credit score.
    Keep them open as long as possible, longer credit history affects your credit in a good way.
    Don't run more than 1 or 2 HARD credit checks a year (opening new accounts).
    SOFT credit checks are ok (credit check for renter history is an example of a SOFT inquiry).
    The more credit you have available (and being used and managed properly) gets you a better credit rating also.
     
    Dyjital likes this.
  16. mjbskwim

    mjbskwim Salmon,Idaho Well-Known Member

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    I don't think it effects it much at all. Back in the 80's and 90's we would change cards like we changed our underwear.You would get a better deal every other day.
    No reson to close that account,just don't use it.Or get the other card,call to close the first card and see what kind of deal the first card offers
    I went for 10 years without using any credit,nothing but bills. I bought a house over here,had no credit score to speak of but no derogatory credit either.
    By the time I was finished with the house,a small limit credit card and a truck loan I was at 760
    The girl at the bank couldn't believe it.
    Personally I would keep the first card but tell them you are thinking of closing it because you were offered a better deal and see what they offer. And get the second card just to up your score a little
    As long as you have some activity but don't abuse the cards they will help your score
     
  17. Certaindeaf

    Certaindeaf SE Portland Well-Known Member

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    Call them and say "Hey, lower my interest rate to X and raise my limit to X (if you want them to) to match what these other guys are offering me now or I'm cancelling". They'll do it so fast it's laughable.
    And interest rate creep happens all the time for absolutely no reason.. keep your eye on it and do the above when it gets too high for your liking.. in case you ever do have to run a balance.
     
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  18. PiratePast40

    PiratePast40 Willamette Valley Well-Known Member

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    I certainly agree with getting a card that offers more than just airline miles, unless you fly quite a bit every year. It's getting tougher to get around blackout dates with a reasonable amount of miles.

    And no, adding a second card doesn't negatively affect your credit rating. Although I will agree that there is a lot BFM involved.

    To those that angrily denounce all credit cards, you need to understand that your lifestyle isn't the only one in this world. Those of us that travel for business know what it takes. Obviously you don't have a clue.
     
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  19. clearconscience

    clearconscience Vancouver, WA Well-Known Member

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    When we bought our house two years ago I asked a out the same thing. I had a long standing card with nothing on it, just figured I cut it down to one card, and our finance guy told me to leave it open until after we did the financing.

    So if your planning on making a big purchase or getting your credit looked at then I would leave it alone, but if not it won't effect it much to close it.
     
  20. The Heretic

    The Heretic Oregon Well-Known Member

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    This.

    Credit history is just that - history. The longer you have had credit the better.

    Another factor they look at is the amount you have had in a credit line and then paid off - i.e., if you had $10K in a loan and paid it off, that is better than $1k in a loan with payoff.

    Finally, they do look at available credit - so if you have $20K available, that is worse than $10K available.

    That said, if you are above a certain rating amount, having 10 points more on your rating won't make much difference; once you are above the "excellent" credit level your rating doesn't matter that much for a home loan, and if you have a "good" rating or better, then other factors matter more - like your income, the amount of the loan, the amount you are putting down, your living expenses and so on.

    I closed my cards a few years before I applied for a loan, not thinking about the credit history thing. I had paid them all off and I didn't want them hanging out there anymore. When I went to buy a house, I was told my credit rating was in the "excellent" range (although not perfect, it was pretty close to it). I had zero debt, enough cash to pay 20% down and pay the closing costs, I had a good job and income. I got the loan, but still had to fill out a lot of paperwork explaining everything (every single address, etc.) and so on.

    Once you get the house and pay on it for a few years, then your credit rating will be really good.
     
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