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Capital one/credit score
So this topic has been beaten to death on here, I have a question that has me thinking. I held on to my Cabela's CC and everything has gone smooth since Bass Pro acquired Cabela's. Since it seems the quality of Cabela's has declined and no real need for Cabela's points now and on top of the recent data breech on Captial One's end it has me thinking of is it time to get rid of this card? I have a good credit score and don't want to see a huge hit if I cancel the card. So my question for those of you who did or have canceled a credit card recently, how much change have you seen in your credit score?
After doing a 3 min Google search, it appears the primary impact of closing a card results if you have other cards w/ balances and the closure increases your credit utilization ratio. In the event you have no other revolving debt, it sounds like the impact of closing a card is minimal to nil, and any impact is likely to be relatively short-lived.
Matt got it, no further answers needed.
If I may piggyback on this thread, what will if anything happen if I just cut up a cc and never close the account? Is this a dumb financial security risk?
There is a chance that the # could get used fraudulently if it has been in circulation, although that risk goes down with time. I would inquire with the issuer if there is a way to deactivate/suspend the card w/o cancelling it. If not, cut it up and monitor the monthly statements.
Edit: I just looked at the online portal for one of my cards and it has a feature to turn it on or off.
I let my cabelas black card expire and did not open the Bass Pro card they sent me. I have no idea what that did to my credit score. I’ve alway for about 50 years had one CC only, and that is the case now.
Credit utilization percentage isn't the only factor it could affect. The average time you've held your credit cards is also a factor in credit score. If you have several cards, and this is your oldest, it could affect your score negatively. If it's your only card, closing it will probably significantly impact your score because of both of these factors.
If you have a cc with a large limit,, and you have zero balance, then close that account, your credit score will drop. In addition, If this is your only “credit account” and you have no other debts; ie no car pmts, house is paid off, etc, your credit score will sit in the cellar for a long time because you have no “available credit” according to the computer. Doesn’t matter that all your stuff is payed off, the computers don’t see those things. Been there.
Dumbest thing I ever did score wise was to close a high limit, very low int rate cc. I should have left the account open and bought fuel once every few months.
so what happens in regard to the captial one card, say you initally applied with visa then was sold out to capital one does that mean I could be affected or i should be safe since initally it was not with capital one?
What WapitiBob said! If you close a cc with a high credit limit, you are DECREASING your overall available credit....and that can affect you debt to income ratio. Also, if you’ve had that card awhile, it will lower your credit history age, and creditors like to see that you maintain your credit and keep your debt paid off over a longer period of time. Keep the balances at zero, and use them a couple times a year, and pay em off right away!
Question: when you say "change our credit score" -- how much do you think it would change? 1/2 point, full point, couple points???
I have been pulling and analyzing credit reports for 15 years and I have people ask me this regularly. My answer is almost always the same, which is your credit score is primarily based on three things: late/on time payments, limit to balance ratio and longevity. If you close an account, especially one with a large limit that has been open for some time, you are not helping your credit report. Another thing to consider is some lenders require a certain number of open trade lines on your bureau to qualify you for some products, so if you have limited accnts open, that could be another reason to leave the card open.
Only really one way to find out.
The purpose of a credit score is to allow you to easily access more debt based on how you performed on previous debt compared to millions of people just like you in similar transactions. Remember the purpose of the credit score is for the lenders to make money on the interest. The higher your score the more they will make because you are a credit consumer. Things that create more debt are generally good for your score. Keeping in mind What Kevin said above . However there are some thing to consider. Open lines are considered debt with no payment history in the score models. So if you have 10 cards with $10k limits you have the capacity to run up $100k in debt instantly. This may not make a difference if you apply for a car loan of $50k . it may make a big difference if you are trying to buy a home and your credit is close to being maxed. If you are looking for a $400k mortgage and you have $100k available on unused cards the model will calculate that you have a potential debt load of $500k with 20% of it being super high interest debt. This could severely impact your ability to perform on the mortgage. So you will typically end up with a higher interest mortgage because of the risk you present. So I advise young people to carry limited credit capacity unless they expect to make a big credit purchase in the next year. They should increase their limits and carry a small balance on each and pay on time, not early. Then payoff the balances 30 days prior and cancel most of the credit capacity a week before they make the purchase.
Remember they love debt slaves ie people maxed out and paying the minimums and will string you along with a high credit score to get you in that situation.
Blows my mind that because I've paid off debts, have good income and only carry 1 credit card, that my credit rating goes DOWN?
Bottom line: If it's your oldest card DO NOT CLOSE IT! It will significantly affect your credit score. If you have a 10k Limit on that card DO NOT CLOSE IT! That will also significantly affect your credit score. If both of the above apply and the next longest credit thing you have is years after you opened this card FOR DANG SURE DO NOT CLOSE IT! These are very much truths coming from a guy that works in the lending business and looks at credit scores all day long.
For those of you that are young and looking to establish credit, I would highly recommend getting a credit card with no annual fee and plan to keep it your entire life, for the exact reason that SD BB points out above. Also, there are often no annual fee versions available of many credit cards. If you are considering closing a card because of the annual fee, call and ask them if there is a no fee card that you can downgrade to. That will allow you to keep that credit line open (often keeping the same card number) and extending the longevity of your credit history.
SD so I am screwed :-) We just replaced our long standing CC with a new one, we have zero debt and that's our only CC. Well wife has some "store specific" ones. We've paid off multiple cars, loans, mortgages and have very positive cash flow. Yet our score will suffer.
Makes no sense.
What happens when you have someone fraudulently charge things on your card, and the CC company closes that account and issues you a new card? Does that affect your credit score at all?
Also, somewhat similar to Bob H in NH’s situation, I’m debt free and plan on staying that way. Why do I even need to be concerned about my credit score if I never plan on needing to borrow money in the future?
t-roy...lots of things now take portions of the "credit score" and use it to rate you for other things. One biggie is insurance. Most States allow your auto and home rate to be based partly on your credit score. Actuarials determined long ago that the higher the credit score the less likely you are to have a loss. Companies pass that on to you as an "insurance score discount" and can be as high as a 40% discount on your home and auto insurance.
Bob H, I feel your pain. When I retired the first of the year, I paid off the mortgage, as well as my truck. I was absolutely shocked when I found out my credit rating dropped 40+ points. It sucks when you’re penalized for not being in debt up to your eyeballs!!!
t-roy, I don't think that having the credit card company replace your card and change the card number should have any effect on your credit or the longevity of your account.
One way to help offset a paid off mortgage or vehicle loan is to maintain several credit cards. Simply put your normal purchases on your credit card (preferably one that earns points) and pay it off before any interest accrues. You have to buy gas and groceries anyways, so use the CC to help keep your score high. However, you need to know that CC companies report to the bureau's once a month, so if you charge something and pay it off prior to that date, you won't really benefit other than having the accnt open. You can find out that date by pulling your own report once and just make note of that date.
The note about insurance companies using your CBR is true and can affect your premiums.
Here's an idea for someone that wants to maintain their solid credit rating without paying interest. Apply for a Home Depot or Lowes or Best Buy CC and utilize their Zero Interest financing offers. Usually when you make a larger purchase. It's free money for up to 36 months and it helps your credit because it shows your payment history. Next time your washing machine goes out, put it on the Lowes card and pay it off before the interest hits. Usually anything over $299 gets free interest.
"I’m debt free and plan on staying that way. Why do I even need to be concerned about my credit score if I never plan on needing to borrow money in the future?"
That's all well and good until a catastrophe happens, like huge unexpected medical expenses, etc. Also, as was said above regarding your credit affecting your insurance premium costs.