Credit Score hit for cancels?

Discussion in 'General Discussion | Miles/Points' started by scotchjeff, Oct 30, 2011.  |  Print Topic

  1. scotchjeff

    scotchjeff Active Member

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    I made a citi run this summer (visa and amex) 75K each...I want to cancel both of these cards....what type of hit will my credit score take when i cancel both?
     
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  2. FlyingBear
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    FlyingBear Silver Member

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    Short term, it will affect your utilization percentage, so depending on your balances, might be a few point hit. Mid- to long-term, nothing really. The only thing to worry about in the long term is how Citi will treat you the next time you apply for any of the cards.
     
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  3. Espan

    Espan Silver Member

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    many folks recommend holding on to the cards, and putting them in a drawer. if first year no fee runs up either call for a retention bonus or switch it to a related no-fee card. That way no hit on credit report and your available line of credit stays high.
     
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  4. NYCAdventurer

    NYCAdventurer Gold Member

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    Why not try for the retention bonuses?? Just accepted an offer "spend $5000, get total 15000 miles. The alternative offer was get 2500 miles just to keep your card open with no obligations.
     
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  5. scotchjeff

    scotchjeff Active Member

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    i have plenty of cards, plenty of available credit and zero balance. I really only need my Citi Executive right now...but I am going to hold on to my Citi AA MC because I have had it for 15 years...I know cancelling that one will hurt my credit.. I am curious about the Citi Visa and Citi AMEX because they have only been open for 4 months...
     
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  6. Toula
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    Toula Gold Member

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    I think beyond your credit score you have to think of how much time and effort you want to put into managing your credit cards.

    Both DH & I got the Citi cards last year and when our annual renewal came up we cancelled them. For us it was a no brainer, we are tired of having 10+ credit cards sitting around. We are in the process of slimming down our credit cards to a manageable level. For us, unless we use it on a daily basis e.g. Chase Sapphire, AMEX Gold or if it has an annual benefit, Hyatt & Priority Club visa free night or a great benefit such as Alaska $99 companion tx we are cancelling as renewal time comes up.
     
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  7. toddreg
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    toddreg Silver Member

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    Does anyone feel it is helpful to actually use the cards in order to appear for it to be beneficial for the CC company to extend a retention bonus of some sort. Getting a card, hitting the minimum spend and then moth balling it would appear to negatively impact your ability to get any retention bonus. What reason would the CC company have to offer you one? How about using it in the month leading up to the renewal fee, would this "trick" them into offering you one perhaps?
    Thoughts?
     
  8. rdraper

    rdraper Silver Member

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    It could actually help your score. Assuming you have other older cards, the average age of your credit could go up.
     
  9. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    I just recently un-mothballed my AA MC to use it for a few months for exactly the reasons you outlined. The charges will count towards MM status, but I am so far away that it really matters very, very little to me. I also currently get 1.2 miles/$, but that, too, isn't too critical. But after a couple months I plan on calling to cancel. If I get a retention bonus offer, I'll keep it, otherwise it's gone once the next annual fee comes around.
     
  10. okrogius

    okrogius Silver Member

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    No. When you close an account, it doesn't disappear from your credit report.
     
  11. okrogius

    okrogius Silver Member

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    Perhaps this is a bit wording specific, but it's probably best to clarify this a bit. Cancelling a card doesn't hurt your credit per se (assuming it doesn't make a significant change to your utilization*) - it only stops that card from helping it in the future (and that older card will help much more in the future than that recent account, hence why it's a bad idea to close it). If possible by the bank (and it generally is), default best choice is generally converting to a no-fee card.

    * - Yes, if your utilization ratio goes down, it does hurt your score. But this change should be negligible if you have many accounts, and it's very easy to fix. The large question is the report length/age.
     
  12. Surface Interval
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    Surface Interval Silver Member

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    I have found you don't have to wait if you want a retention bonus (think Dec 1). If you call and want to cancel they will give you a retention bonus even if you have had the card for a short while. I got a bonus after having one card for a whopping two months. As always YMMV.
     
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  13. sunspotzsz
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    sunspotzsz Silver Member

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    I don't understand why do people care so much about the short term credit hit?

    If you don't need credit in the near future, which is the case for most of people at most of the time, why do you even care?
     
  14. Espan

    Espan Silver Member

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    nice tip!
     
  15. infamousdx

    infamousdx Silver Member

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    It will fall off your report 7 years after closing, correct?
     
  16. okrogius

    okrogius Silver Member

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    Negative information generally has a time limit (number of years varies based on what it is). Positive information (such as that closed account hopefuly) should stay indefinetely.

    To clarify this a bit, in general the more information the reporting agency has on you, the more valuable their advice is to creditors. Thus, it's in their best interest to collect as much as possible, and to retain as much as possible. So generally they would never want to remove anything unless required to do so legally (inaccurate information or limits on how long they can keep negative information). Of course with that said, there's no strict guarantee that anything should stay on for any amount of period (it's just their best interest).
     
  17. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    I just downloaded my Experian report yesterday and noticed that for some closed accounts it has blurbs such as

    "This account is scheduled to continue on record until Apr 2020."
     
  18. icurhere2
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    icurhere2 Gold Member

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    I believe that positive information (like payoffs) can stay for 10 years and active, non-closed accounts stay indefinitely (even if not used).
     
  19. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    But what is the impact of having a ton of closed (positive/payoff) accounts on your record? If you actively churn as fast as you can, you could build up quite a collection of those records over time. Is that going to impact the credit score?
     
  20. okrogius

    okrogius Silver Member

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    Seems to be a more recent cost cutting trend (storing that extra information isn't free, especially when added up over many accounts). Exact mileage will vary though.
     
  21. Kalboz
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    Kalboz Gold Member

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    Utilization makes up 30% of your credit score and evaluates the overall usage of your available credit.

    Utilization 30%
    Payment History 20%
    Cash flow 15%
    Balances 10%
    Types of Credit 10%
    Available Credit 5%
    Length of Credit History 5%
    New Credit 5%
     
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  22. jbcarioca
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    jbcarioca Gold Member

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    It really is not quite so simple as this, nor do credit scores typically build from percentages in this fashion. They are built using different weightings and calculation structures. So, for example, payment history is far more heavily weighted than the other factors you list, generally, and a single 90 day (actually three cycle) delinquency will often disqualify further credit. Cash flow is not used in credit card calculations, nor is data available from which to calculate it.
    This is only true if you are revolving on your credit cards. Generally utilization will report as a very low number, or zero, if you pay the balance in full every month. There are exceptions but to have utilization high enough to make an issue (ie above about 70%) most people would need to revolve.

    Anybody who has two cards from the same issuer, each with $75k lines is MOST unlikely to be affected negatively by closing an account. You have no worries in that case, given where your credit already is it will remain sterling.
     
  23. FlyingBear
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    FlyingBear Silver Member

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    For anyone with multiple cards in use, it is pretty much impossible to get zero utilization even if the balances are paid in full. The timings rarely workout. Like you said, not an issue for most with large lines, but something that needs to be kept in mind.

    I think he meant 75k points, not $75k lines. I'd be surprised if anyone that can get $75k lines outright will actually care about points from cards.
     
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  24. jbcarioca
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    jbcarioca Gold Member

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    a) a fair number of people manage to have that happen. For some years I managed my prepayment dates to coincide with 5 days before reporting cycles. Too much trouble to be worth it, assuming you can find out the reporting dates. For most issuers it is cycle date, so it is not hard to just pay a fews days before billing due date.
    b) some who have that do care. IME most do. I do!
     
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