Got a new card, what do I do now?

[ctmgr]

Yeah! I got approved for a VISA from my bank with a higher CL!

The thing is, now I have too many cards. I don't need all this credit.

Do I close my subprime accounts or just put them in a sock drawer and build history with them?

What factors should I consider...interest rates, annual fees?

[LNY]

Yeah! I got approved for a VISA from my bank with a higher CL!

The thing is, now I have too many cards. I don't need all this credit.

Do I close my subprime accounts or just put them in a sock drawer and build history with them?

What factors should I consider...interest rates, annual fees?

You already know the answer to this one, don't you?

[credit_junkie87]

I'm in a similar situation myself... Let's weigh the pros and cons for closing.

Pros: Sub prime accounts look bad on your report, and some believe may even cause your score to be lower.

Cons: You would lose history you have built up over the years.

LNY, what do you recommend I do if my sub prime accounts haven't been established for that long. In fact, my BoA is 6 months older than my Wells Fargo Financial which is only 3 months old.

[direred]

Pros: Sub prime accounts look bad on your report, and some believe may even cause your score to be lower.

Cons: You would lose history you have built up over the years.

I closed my Orchard account (open six years) last month.

FICO change: zero points.

[LNY]

All of this--how many points you lose by closing accounts--depends on what else is on your reports and how old it all is. If you close a 6-year account but all your other accounts are roughly the same age, you won't lose much because the average age of your accounts won't significantly change.

There are no hard and fast rules about this, because any change in your FICO (up or down) depends on what's happening with ALL your accounts. Like if you appear to lose nothing after closing an account, it could very well be that you gained points for something else on your report (drop in util, on-time payments, the accounts getting a month older, etc) and any loss for closing an account was offset by those things. Every daily activity on every account affects your FICO... not just one.

We could drive ourselves crazy trying to predict this stuff. But in general, we do know that closing older accounts that will significantly lower the average age of our accounts will have a negative effect on both history and utilization.

[LNY]

I'm in a similar situation myself... Let's weigh the pros and cons for closing.

Pros: Sub prime accounts look bad on your report, and some believe may even cause your score to be lower.

Cons: You would lose history you have built up over the years.

LNY, what do you recommend I do if my sub prime accounts haven't been established for that long. In fact, my BoA is 6 months older than my Wells Fargo Financial which is only 3 months old.

Subprime accounts have no effect on your score at all. FICO doesn't recognize any difference between Capital One and Discover. The only negative effect of subprime accounts is upon manual review... an underwriter sees First Premier and Orchard, and is clued in on possible past financial problems that may have either dropped off or been disputed off.

Unless your only other accounts are under a year old, closing that Wells Fargo account isn't going to hurt you at only 3 mos. old. Why do you want to close it?

[direred]

My oldest account was six years, my next-oldest open account is 26 months. It's possible that due to the number of accounts I have (I now have 50 TLs on EX) that something that might have made a huge difference had I five TLs made no difference because I had fifty.

I was expecting about a 20-point drop, though, because when my car loan was paid off (and it was 5-1/2 years) this summer, my EX FICO dropped 20 points. That significantly changed the average age of open installment loans.

Personally, I'd close all the subprime accounts (in order of annual fees and costs, then interest rates).

[LNY]

My oldest account was six years, my next-oldest open account is 26 months. It's possible that due to the number of accounts I have (I now have 50 TLs on EX) that something that might have made a huge difference had I five TLs made no difference because I had fifty.

I was expecting about a 20-point drop, though, because when my car loan was paid off (and it was 5-1/2 years) this summer, my EX FICO dropped 20 points. That significantly changed the average age of open installment loans.

Personally, I'd close all the subprime accounts (in order of annual fees and costs, then interest rates).

Oh my goodness!!! Yes, with 50 TLs, there is absolutely no way for you to gauge what causes a certain movement. Even if you lost a few points for closing that account, that was probably offset an hour later by something else. Your scores are probably changing by the hour!!

How do you keep up with all that?

[credit_junkie87]

Unless your only other accounts are under a year old, closing that Wells Fargo account isn't going to hurt you at only 3 mos. old. Why do you want to close it?

My WFF account is a line of credit, not a CC with a $0 annual fee and a CL of $5000. The interest rate does not matter because I don't ever plan to use it.

I fear I may be denied better CCs and higher limits on my CC because of this account. Firstly, because it is from a sub prime lender and secondly lenders may think I have too much credit available. I don't carry balances, so my utilization is pretty low since I got a CLI from BoA recently.

I also have a $0 annual fee Crap 1 that I want to get rid of because I now have better cards...

[credit_junkie87]

This thread by Northern Lights seems to suggest that sub prime lenders do in fact lower your FICO score.

http://www.debt-consolidation-credit-repair-service.com/forums/showthread.php?t=248872

[LNY]

My WFF account is a line of credit, not a CC with a $0 annual fee and a CL of $5000. The interest rate does not matter because I don't ever plan to use it.

I fear I may be denied better CCs and higher limits on my CC because of this account. Firstly, because it is from a sub prime lender and secondly lenders may think I have too much credit available. I don't carry balances, so my utilization is pretty low since I got a CLI from BoA recently.

Whether you close it or not, it will still appear on your reports for up to 10 years... and if you keep it open, one day you might be glad for that $5000 utilization cushion.

My utilization is around 5%. My reports contain cards from Household and Capital One. None of this is stopping anyone from giving me cards or CLIs.

[LNY]

This thread by Northern Lights seems to suggest that sub prime lenders do in fact lower your FICO score.

http://www.debt-consolidation-credit-repair-service.com/forums/showthread.php?t=248872

Subprime cards like Orchard and Capital One do not lower your scores. They only look questionable upon manual review, and may affect your score on that lender's own internal scorecard, but not your FICO. A card is a card to FICO.

Like FICO treats Crown Jewelers and Chevron like any other accounts... but a human looking at your reports will recognize them as rebuilders. It's a popular myth that FICO gives you extra brownie points for having an AmEx card, and takes points away for a First Premier.

[direred]

Oh my goodness!!! Yes, with 50 TLs, there is absolutely no way for you to gauge what causes a certain movement. Even if you lost a few points for closing that account, that was probably offset an hour later by something else. Your scores are probably changing by the hour!!

How do you keep up with all that?

I don't have 50 open tradelines. I have 22. A huge percentage of the closed ones are student loans prior to consolidation (BA + two master's degrees, so lots of little tradelines).

22 tradelines fits on a spreadsheet. I pay all accounts with balances twice a month, that way I never have to worry about when they're due. I just plug in how much to pay, and it calculates everything (I do update balances the day before my payday so it calculates correctly, though).

In the case of closing Orchard, though, I'd pulled my FICO a few days earlier, so there literally was nothing else that changed. Weirdly, my EX FICO hasn't budged at all since my car loan reported closed in August (and I lost 20 points). My EX is the steadiest of all -- EQ and TU flip between two numbers quite frequently. Currently EQ is oscillating between 628 and 631; TU between 643 and 647.

[LNY]

I don't have 50 open tradelines. I have 22. A huge percentage of the closed ones are student loans prior to consolidation (BA + two master's degrees, so lots of little tradelines).

22 tradelines fits on a spreadsheet. I pay all accounts with balances twice a month, that way I never have to worry about when they're due. I just plug in how much to pay, and it calculates everything (I do update balances the day before my payday so it calculates correctly, though).

In the case of closing Orchard, though, I'd pulled my FICO a few days earlier, so there literally was nothing else that changed. Weirdly, my EX FICO hasn't budged at all since my car loan reported closed in August (and I lost 20 points). My EX is the steadiest of all -- EQ and TU flip between two numbers quite frequently. Currently EQ is oscillating between 628 and 631; TU between 643 and 647.

With all the things that have changed for me in the last year (a boatload of new accounts, quadrupling+ of available credit, accounts aging, a couple closing, another year of on-time payments, deletions etc.) my EQ FICO has never changed by more than a couple of points. Everything just keeps cancelling each other out, I guess.

I'm very impressed with your system. I wouldn't even know my way around a spreadsheet.

[ctmgr]

Wow! What great information!! Thanks to everyone, especially LNY!

The extra cards will go in the sock drawer... I will pull them out to buy a tank of gas once a month, then send them back to hibernation.

[direred]

Some people with several cards put them into 2 or 3 piles and rotate piles each month. That way, each card is used at least once every three months (or two months for a two-pile system).

[LNY]

Wow! What great information!! Thanks to everyone, especially LNY!

The extra cards will go in the sock drawer... I will pull them out to buy a tank of gas once a month, then send them back to hibernation.

But you already knew that... go on, admit it!

[ctmgr]

But you already knew that... go on, admit it!

Maybe i just needed a little validation. Actually, approaching this from a purely strategical standpoint is new to me... just want to make sure I'm doing it right.

Any other tricks to the trade I need to know about?

I learned about due dates and reporting dates the hard way. LOL

[LNY]

Maybe i just needed a little validation. Actually, approaching this from a purely strategical standpoint is new to me... just want to make sure I'm doing it right.

Any other tricks to the trade I need to know about? someone needs a spanking!

I learned about due dates and reporting dates the hard way. LOL

Most of us learned a great deal of what we know about this stuff the hard way... from mistakenly closing old, unused accounts to the Capital One "let's inflate everyone's utilization and lower their scores by not reporting limits" game. You live and learn, but now you know better than to do stuff without coming here first.