Credit Card Question

[deadly7]

Originally Posted by JohnGalt

unless a card has an annual fee there is no reason to cancel it.

Is there a sound reason behind this? I guess it's moreso the "better safe than sorry" person inside me that doesn't want to leave a card open unless I need it.

 

[rjmaiorano]

Originally Posted by deadly7

On the subject of CC's, I have a couple of older CC's that I don't ever look at (I haven't even signed the new card after it expired). Should I just cancel?

+1 to not cancel, unless you've got an annual fee. Generally you want to keep the oldest card you've got because length of credit history can be a big factor in fico scores.

 

[JohnGalt]

Originally Posted by deadly7

Is there a sound reason behind this? I guess it's moreso the "better safe than sorry" person inside me that doesn't want to leave a card open unless I need it.

- Depending on whether or not you have balances on other cards, it could increase your overall utilization, which would drop your FICO.
- It will (down the road) decrease your average age of accounts, which would drop your FICO.

 

[whiteslashasian]

Originally Posted by rjmaiorano

+1 to not cancel, unless you've got an annual fee. Generally you want to keep the oldest card you've got because length of credit history can be a big factor in fico scores.

+1

I opened my first card 5 years ago while in College. I don't use it anymore but keep it open because it shows favorably on my credit score for having a card that long. 8+ years is optimum.

 

[East2West]

Originally Posted by deadly7

Is there a sound reason behind this? I guess it's moreso the "better safe than sorry" person inside me that doesn't want to leave a card open unless I need it.

It will help your average age of accounts as it grows more mature.
It will, with a zero balace, give you a smaller utilization percentage. Not only does FICO score individual accounts, but the total balances and limits are then totaled and that percentage is factored in to your FICO score as well.
Potential credit limit increases down the road will further to help you.
With it open and updating, it will remain as a positive account on your credit report longer than a closed one will.

 

[deadly7]

Ah okay. I'm not sure if it has an annual fee or not (something I will check later). If it does have one and I cancel it, will it negatively hurt me? The credit card I got after it was probably 2.5 or 3 years after it so the average age would probably drop significantly.

 

[TyCooN]

What are some good credit cards for a newb who has never had one before?

 

[East2West]

Originally Posted by deadly7

Ah okay. I'm not sure if it has an annual fee or not (something I will check later). If it does have one and I cancel it, will it negatively hurt me? The credit card I got after it was probably 2.5 or 3 years after it so the average age would probably drop significantly.

As long as it is in good standing, then no it will not negatively affect you. It just won't help you much any more. Also, if you do close it make sure that your account is reported to the credit reporting agencies as "closed by consumer". It will raise less eyebrows when your report is manually reviewed for risk analysis for future credit applications.

 

[uhurit]

Originally Posted by TyCooN

What are some good credit cards for a newb who has never had one before?

If you got a job+no derogatory credit+decent income...get a Chase Visa, very solid+a cash back option.

Also, the bank you have your checking account with, most likely has a credit card too

Otherwise, a Capital One(...not so great, but OK for starters, if handled very carefully)

 

[otc]

Originally Posted by East2West

As long as it is in good standing, then no it will not negatively affect you. It just won't help you much any more. Also, if you do close it make sure that your account is reported to the credit reporting agencies as "closed by consumer". It will raise less eyebrows when your report is manually reviewed for risk analysis for future credit applications.

An account closed by consumer doesn't look bad...but if it is your oldest account, it still hits your oldest account score no matter how you close it.

If the card has no annual fee so long as you make a purchase...just put your netflix bill on that card (or any other similar recurring small charge) and set it up to auto pay from your bank account every month.

 

[RSS]

I also suggest keeping open the unused accounts ... part of a credit score is also based on credit available and credit used. You want a nice spread between the two.

 

[BossTweed]

^ Should I be requesting a larger credit line on a current CC as often as possible then? Just to keep utilization down?

 

[RSS]

Originally Posted by BossTweed

^ Should I be requesting a larger credit line on a current CC as often as possible then? Just to keep utilization down?
I'm not sure how it affects my fico score ... but I keep my credit line at three times what I ever plan to use.

 

[JohnGalt]

Originally Posted by BossTweed

^ Should I be requesting a larger credit line on a current CC as often as possible then? Just to keep utilization down?

that depends - f the cc company will do a hard pull for a limit increase, you probably don't want to request it. if it is a soft pull, then go for it. keep in mind though, that if you have high utilization you are less likely to get a credit limit increase. there is also a line of thought that "higher limits begit higher limits"

 

[otc]

Just let it roll...

my credit card company was doing a 2k limit increase every few months until I called and told them to stop doing increases (but don't let them lower it...that looks bad).

In the past it would have been bed if yours increased too much as something like the credit crisis would come along and they would start cutting limits to reduce liabilities...this would then show up on your report as having someone forcibly reduce your available credit which is bad.

I would say that these days...you don't have to worry too much about them overextending you credit