I JUST CLOSED THRE CREDIT CARDS OUT.. WILL THAT HURT MY SCORE?

Question

I have had three Capital One cards for about seven years. They all three charge a yearly fee in addition to any credit charges so I opted to close them.. Do you think that this will hurt my credit?

Eric M. · Answer

Actually longevity is a secondary issue here.  A bigger hit to your score might come from % of outstanding balance to available credit.
No one knows the exact ratio that gives the highest score.  It shouldn't be too high for sure, but often too low is also less than ideal.
For example, you have 5 credit cards with $10,000 limits for $50,000 in total available revolving credit.  You have an average monthly balance of $3000 each on 2 of them and $0 on the other 3 that you don't use.  Your ratio is 12% (6K/50K).
When you cancel the 3 unused, your ratio jumps to 30% (6K/20K).

That makes it appear that you are much more extended even though you may look at it like you are reducing.  That causes a big drop in FICO.  The longevity will work itself out over time, but this will not unless you get this ratio back in line.

Of course this is all assuming your ratio was good before the closings.  It is possible that you had way too many cards (too much available credit) open.  Even if the balances are zero, if you have too much available revolving credit compared to your income, it is bad.  So in that case, you could improve your score by closing.

All that said, 800 is good and you don't need to worry about a 25 point hit.

Also, don't just accept the annual fee.  Give them a call when it bills and ask for a refund.  On mine, they always refund on the non-airline affiliated cards.

Carlos Flores · Answer

Longevity and utilization are important as mentioned above.  My suggestion would have been a little different with three cards from the same issuer, however.  You should have asked to consolidate the 3 Cap One cards into a one account (the oldest), asked for a credit line increase above the original $3500, and asked them to waive the annual fee (or whatever fee caused you to close the accounts).

Ophelia Nicholson · Answer

Hopefully you have other open accounts on your credit apart from those credit cards because lenders look for you to have 3 tradelines that are open and active with at least 1 yr history so if it doesnt affect your credit it will affect you when you go to buy a house.

Joel Owens · Answer

Well I wish you would have posted here BEFORE closing them out.

Length of credit history in good standing DOES affect your credit scores.

If you have other credit that has a long history it shouldn't affect you that much.If however closing the 3 credit cards with 7 years of history you know only have a few credit lines with only 1 year or 2 of being open that is not great.

In the end it shouldn't hurt you too much.

When they made the new credit card rules last year or was it the year before credit card companies raised interest rates and annual fees from no fees.

So what happened is the great credit people lost benefits because Obama wanted people with bad credit to not be taken advantage of.The credit companies simply restructured to make the same money.

So A law passed that had good intentions but was misguided.

The government believes when they pass a law people or companies will just take the loss but it never happens.So in the end these laws are just spinning wheels and not doing anything.

I know many people who have closed their accounts once interest rates go up or annual fees are imposed.

The downside is people want to maintain credit but some credit companies have been closing accounts if you don't use enough and they make a certain amount of interest off of you.

It is getting rediculuos.

J Scott · Answer

What you should have done (and you still can) is to attempt to replace that lost credit with new credit.  Find another credit card company that will extend the amount (or more) of credit that you are shutting down.  Preferably do this before you shut down the lines, but if you can find additional credit at this point, that's better than where you are.  The fact that you've reduced your available credit by 75% will hurt you, but adding new lines will fix that issue.  You'll still have the longevity issue, but hopefully it won't impact your score too badly.

Steven Hamilton II · Answer

I would've called the company and depending upon how long you've been with them arranged for them to not charge a fee for you to keep the account open.

Travis Elliott · Answer

I didnt have any balances on these cards and the three that I got rid of only had a total credit line of $3500.00. So now I am down to one card with a credit line of 1050.00 and and a zero balance..

Joel Owens · Answer

800 and above is in the top 10 to 15 percent of credit profiles nationwide so you should be fine.

Just do more research before getting jerky with decisions such as closing accounts.

Most lenders will give you the best rates of everything with that score.

Is 805 the AVERAGE of Experian,Trans Union,and Equifax??

You need to know your score for all three.Different creditors pull from different agencies depending on where their headquarters are located.

I have seen point variations in the hundreds of difference per agency before.The reason is people have similar names etc. and info gets reported incorrectly or to the wrong file.

Travis Elliott · Answer

Thanks guys

I was on the phone with the fourth CC company when I started reading Joel's post so i didn't cancel that one.. My credit score is 805 so i don't think it will hurt me when i go to buy a new house but you never know..

Rob Gillespie · Answer

I hate to say it, but yes. one of the scoring models is longevity of the creditor. I don't think this is gonna ruin you, but unfortunately it will give you a  small hit.

I JUST CLOSED THRE CREDIT CARDS OUT.. WILL THAT HURT MY SCORE?

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