Does Opening And Closing Cards Hurt Your Credit Score?

Related: DansDeals Credit Card Links And FAQ’s on the DansDeals Forums

This is a question that I’m asked all the time.
Frankly, it’s not one that I’ve concerned myself with too greatly. I check my real FICO score periodically (not the FAKOs or “Fico-like” that you get with 99% of the free score trials out there that often aren’t even out of 850 and are not what the credit card banks are looking at) and it hovers in the upper 700’s, which is very good. I’ve never had a problem getting a loan due to my credit activities.

It’s not worth opening mileage cards if you don’t plan to pay off your bils on time, so this article is written for responsible people that spend within their means and don’t use their credit card as a blank check.

In the past 8 years or so since I’ve turned 18 I’ve opened and closed many hundreds of cards, earning millions and millions of miles and points that have allowed me to fly around the world multiple times in first class while staying in 5 star hotels literally for free. Our last round-the-world trip would have cost us nearly a quarter of a million dollars(!) had we paid retail for all of the airfare and hotels, yet I was able to do it for next to nothing with miles and points from opening just a handful of credit cards.  For me that’s the real beauty of miles, to use them on 5 star experiences that I could otherwise never afford.  Plus when you redeem miles like that each mile becomes worth 5, 10, 20, or even 30 cents instead of 1 or 2 cents when used for a domestic coach flight.

Back to the question on hand though. Here is the makeup of your 850 point FICO score according to MyFico:

-Payment History: 35%.
Pay your bills on time and you should ace this category. The more accounts you have that you pay on time the higher your score.

-Amounts owed: 30%
This measures your credit utilization ratio. The more money you spend, the higher your utilization ratio will be, which lowers your score. The more total credit you have available, the lower your utilization ratio will be, which raises your score. So the more accounts and credit you have, the better your score will be here.

Credit utilization ratio applies for each card you have individually (don’t use too much of your credit on any card) and across all of your cards collectively. A credit utilization of about 4% or 5% individually and collectively is thought to be ideal.

If you close an account and lose the credit line your score will go down. However, AMEX lets you transfer your credit line from one credit card to another so consider transferring part of your credit line to a new card before cancelling it. If you are denied for a new Chase card you can call their reconsideration department and have them close down an old card and move that old credit line to get the new card approved or simply keep the old card open and move part of its credit line to get the new card approved. In this way your credit utilization ratio won’t go up and your score won’t go down!

An important factor here is that once you get your bill for the month that spending on the bill will count against you, even if you pay it off on time! If you pay the recent activity on your card off before your statement closes your score will go up! I’ll often pay off the spending on my cards multiple times per month to keep my utilization ratio low.

-Length of credit history: 15%
This takes into account your oldest account, the older the better. It also factors in the average age of your accounts.
It’s important to note that even if you close an account, it stays on your record for about 10 years after you cancel the card! So even if you close an account you won’t hurt yourself in this category until 10 years down the line when the account falls off of your credit report. By that point you should have other older cards that will keep your average account age high enough not to adversely affect your score.
It is a good idea though to keep your oldest account open, although with AMEX even if you close your oldest account they often report newer accounts to have the same opening date as your oldest AMEX cards.

-New credit: 10%
This taken into account credit inquiries and new accounts, which can lower your score temporarily. These fall off your report after about 2 years and most banks only look at the number inquiries you have within the past 6 months.

There are 3 credit agencies (Experian, Equifax, and Transunion) and opening a card will generally only affect your score in 1 of those agencies as the inquiry only hits 1 agency. A notable exception to this rule is that Capital One hits all 3 of your credit reports, so beware that opening a card from them is 3 times as detrimental as opening other cards are.
When you apply for multiple cards (people often will do 2 or 3) from the same bank at the same time using multiple different web browsers (IE, Firefox, Chrome, Opera, etc) you can increase your odds of getting approved for multiple cards and you will generally only get 1 inquiry on your report regardless of how many cards you apply for.

The same bank will check different credit agencies depending on the state which you list as your home address. If you have an NJ address you will find that getting new cards may be harder than from other states as AMEX, Citi, and Chase all inquire from Experian. In some states those banks all inquire from different agencies so there it would be easier to get more cards if you live in those states. Some DansDeals Forum members have had success freezing their social security number at two of the 3 agencies to get approved for more cards.

In this DansDeals Forum thread members report what state they live in and which agencies each credit card bank pulled their credit from.

In the short term you may see your score drop when you apply for a card due to this category and the average age of your accounts, but in the long run having more cards will raise your score, as they improve your payment history (35%) and credit utilization (30%) and eventually the age of your account, which continue to grow older even after you cancel the card.

Types of credit used: 10%
This has little to do with the opening and closing of accounts but takes into factor if you have other accounts like ratail accounts, auto loans, a mortgage, etc. The more varied your portfolio the higher your score.

It’s worth noting that if you are young and building your score, having a parent or relative adding you onto an old account with your social security number that has a good payment history and a low utilization of credit will greatly improve your score and odds of getting approved for a card. Conversely being added onto a card that uses a high percentage of its credit line will hurt you.  Being on a card with a very high credit score may make it tough to get approved for cards if you apply for a card and report a low annual household imcome number. You can also more easily get approved for a retail card, like from Gap, or a secured card, than a regular credit card. Start using those cards for a few months and then try to get your own card and start racking up those miles!

In summary, closing a card won’t hurt you in the short-term as long as you are able to salvage your credit line by transferring it to another card which will keep your credit utilization low.  If you anyway keep your utilization low, or pay off your accounts multiple times per month, then it won’t matter even if you can’t salvage the credit line.  In the long-term (10+ years after closing the card) there can be an effect if you don’t replace the closed cards with other cards to keep up the average age of your accounts.
Opening a new card will lower your score temporarily due to the credit inquiry and lowering of your average account age. However the inquiry will fall off your report soon enough and only makes up 10% of your credit score. The average age of your accounts will continue to get older even if you cancel the new card as it sticks around for 10 years after you cancel it. Additionally having more cards in the long-term will benefit your score as you will have more total credit which will raise your credit score and as the cards grow older your average age will go up which will improve your score.

My score has remained high even with churning by following some of these methods mentioned in this post, and now hopefully yours will too!

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56 Responses to “Does Opening And Closing Cards Hurt Your Credit Score?”

  1. H-man Says:
    1

    Thanks Dan for the great article. I have always wondered if it really gets affected or not. I have a card that charges me $45 a year. I haven’t used it in 5 years and I’m still not sure if the annual fee is worth the minimal higher credit score.

    ReplyReply
  2. sky121 Says:
    2

    Is it your only card? Can you downgrade it to a free one?

    ReplyReply
  3. Deal Guy Says:
    3

    Nice article!!
    How far apart in time can you do multiple browsers? Does it need to be seconds apart>

    ReplyReply
  4. Anonymous Says:
    4

    Thanks for this clear “sikum”
    2 questions, If I add myself on to someones amex card which will report on my credit report I read, what happens if I close my card is it considered as I closed an account even though its just an AU? And also, why pay off the bill multiple times in middle of the month, is it not just the statement date that matters and gets reported?
    Thanks Dan

    ReplyReply
  5. Yitzi Says:
    5

    Thanx for this great condensed article. If I add someone on to my cc as an au to boost their credit score, will that persons score reflect/effect my score?

    ReplyReply
  6. Tuchus Says:
    6

    Hey dan!
    Great article. Very well written, straightforward, and clear. Just one question: you said you have opened hundreds of credit cards. How many on average did u manage to open a year? I have been churning for about 1.5 years and only opened up about 15 cards, and i cant do much more because of all the inquiries! How did u do soo many cards?!

    ReplyReply
  7. HSS Says:
    7

    Dan,

    Out of the hundreds of cards that you opened (I am assuming you are only including the ones in your name, not family members/spouse) can you give a breakdown of what cards you churned and how many cards of each you’ve done? Did you churn over 100 AA cards?? What other cards were there good for churning?? How many SPG have you done and have you gotten the signup bonus each time?

    Thanks!
    HSS

    ReplyReply
  8. churning addict Says:
    8

    @Deal Guy:

    It has to be before the credit company searches your score. so basically do it as close together as possible, but don’t worry if they are a couple minutes apart.

    @Tuchus:

    You should have done the browser trick. Then you could have opened 5 cards each time using 5 different browsers, While still getting only 1 inquiry. Hence those 15 cards could have been 75 cards with only 15 inquiries in the past 1.5 years. And instead of getting around 600,000 miles you would have 3,000,000 miles 🙂

    ReplyReply
  9. Not trying to be a kill joy! Says:
    9

    Do you have any info re. the legality of selling the various miles, the possible consequences and the risk of prosecution if any?
    Also are there any halachic considerations?

    ReplyReply
  10. H-man Says:
    10

    Sky 121: Its not my only card and they won’t let me get away with the fee

    ReplyReply
  11. JoeSo Says:
    11

    Amazing article Dan. I have been hoping for one of these.
    Can you address business cards as well? What is there effect on credit scores?

    ReplyReply
  12. Moshe Says:
    12

    Hey Dan
    Thanks for the great article. How long after closing a card would you recommend to wait before trying to open that same card again?

    ReplyReply
  13. Dan Says:
    13

    @H-man:
    What card is it? Why do you want to keep it open if you never use it?

    @Deal Guy:
    I do it seconds apart by filling out the info on all the apps and then clicking apply on the apps.
    You might not need to, but why not?

    @Anonymous:
    I believe if you close an AU card then it will be as if it was never on your report.

    Once you receive your statement that account balance has already been reported to the credit agencies and is hurting your credit score.
    Some cards report the balance in middle of your statement, some just before your statement prints, and some just after your statement prints.

    Pay early and pay often is my motto. That way whenever it is reported your utilization will be low and thus your credit score will be higher when you want to apply for your next cards.

    @Yitzi:
    No.

    @Tuchus:
    There are plenty of strategies, but like I said I do have an easier time being based in OH than someone in NJ or even NY.
    Ideally it seems being based in WA is the best though.

    Read up on freezing your scores to get more cards on the forums and do multiple browser apps to get more cards with less inquiries.

    Also your banter and negotiation skills with reconsideration reps can be the difference between being denied and getting a denial turned into an approval.

    @HSS:
    There isn’t a card out there that I haven’t churned. I have 3 million miler with lifetime Platinum status on AA just from churning their cards. And my wife is also a million miler with lifetime gold from churning now.

    @Not trying to be a kill joy!:
    Most programs do not allow the sale of miles and if you are caught selling miles they can close your account.

    For something to be illegal though it would have to be against the law, and there is no law against selling miles.

    But why not use your miles to explore and learn to appreciate the amazing world that G-d has given us?

    @JoeSo:
    Business cards are great!
    -Spending on them doesn’t count against your utilization ratio.
    -Closing them won’t hurt your utilization ratio.
    -Opening them won’t help your utilization ratio.
    -Inquiries from opening them do count against you.

    @Moshe:
    Every card is different. Sometimes I’ve had 2 of the same card open, sometimes I’ll wait a day, sometimes 30, sometimes 60, etc.
    With churning it’s all trial and error, there are no set rules.

    ReplyReply
  14. daniel Says:
    14

    Dan can you please tell me what the browser trick is and does it work on all cards thanx alot

    ReplyReply
  15. Mauiguy Says:
    15

    Being added as an authorized user no longer improves your credit score like it used to. This was stopped a few years ago because to many people were selling there credit to people by adding them as a user until after they bought a house.

    ReplyReply
  16. Dan Says:
    16

    @daniel:
    At the top of this article is a “related” link. Click on it and read up!

    @Mauiguy:
    FICO said they were going to stop counting AUs, but in practice this didn’t happen AFAIK. There is a federal regulation that lenders factor in shared accounts between spouses and FICO would be in violation of this rule if they didn’t count AUs as part of the credit score.

    ReplyReply
  17. Tuchus Says:
    17

    wait, do you mean to say that when i apply for a business card i don’t get a hard pull on my CR? or do you mean tht the hard pull does not lower my score? Or do you mean that creditors disregard them when evaluating you for CC’s?

    ReplyReply
  18. Dan Says:
    18

    @Tuchus:
    I didn’t say or mean any of those things.
    The inquiry (aka hard pull) does count against your personal credit score.
    Spending on the card however, does not count against you. Nor does it hurt you to close the card as there is no reported spending or spending limit on your personal credit report from a business card.

    ReplyReply
  19. Tuchus Says:
    19

    Thanks for the clarification
    I guess i got a little too excited 🙂

    ReplyReply
  20. lrgfc Says:
    20

    Dan, ahhhh, just realized when I canceled my SPG consumer card for reapply, forgot to transfer my CL. So Should I call rep to request CL transfer? But I am worrying about doing this will let them know I have a previous SpG which reduce my chance get 30K again on the new cards I got…
    Another quick question, will existing SPG consumer card affect the chance getting 30K bonus for SPG bussiness? or still YMMV? thanks so much for all your helpful blogs and replies.

    ReplyReply
  21. Dan Says:
    21

    @lrgfc:
    Once you cancel it’s too late, but I wouldn’t sweat it too much. With new cards you’ll replace that credit line soon enough.

    Having a SPG consumer card will definitely not affect being able to get 30K on the business card. YMMV applies for churning the exact same card.

    ReplyReply
  22. lrgfc Says:
    22

    @dan thanks for your quick reply. I see. I will keep updating my churn case under your forum topic. Does it harm credit score if requesting increase CL after opening new card for just a month? I guess no as long as I could sell a legit story to reps. Awesome thanks.

    ReplyReply
  23. Mark Says:
    23

    @Dan Great Info. Just to clarify, If i have around 7 Credit cards totalling over 100,000 in Credit but only one of those credit cards I used the 0% Apr Rate to Cash Advance $6,500 When the whole credit line of that credit card is only $7,000. I pay the min required and never had any late payments. Would that effect my score if i still have another 50,000-100,000 in credit that i only use maybe another $1,000 per month?

    ReplyReply
  24. Yisroel Says:
    24

    @Dan In Jan 2010 i got a tax Warrant for unpaid taxes Which upon realizing it affected my credit at that time I immediately paid fully in Feb 2010. The tax issue was onmy name as well as my wife as we file Jointly. I was able to get credit cards but some carriers said i was not eligible bec of that tax lien that i had. I have my own business for 2.5 years and wasnt able to open a single credit card there yet bec of the tax lien eventhough it was satisfied. Any ideas of what i can do to get approved??

    ReplyReply
  25. Dave Says:
    25

    I saw this today on the Today Show on NBC. Seems like they say it does lower your score.

    http://www.msnbc.msn.com/id/21134540/vp/#43905938

    Dan, What do you think?

    Dave

    ReplyReply
  26. Dan Says:
    26

    @lrgfc:
    If they have to pull your report it can hurt your score. Ask them if they have to do a pull to get an increase.

    @Mark:
    Credit utilization ratio looks at cards individually and collectively, so maxing out a card like that is hurting your score.

    @Yisroel:
    I would talk to a tax lawyer.

    @Dave:
    Quite simply she’s wrong.
    A closed account stays on your credit report for 10 years.

    She says that closing an account will affect your payment history and your average account age (she calls this “length of credit history” when in fact unless its your oldest card it can’t affect that particular factor). In fact it will only affect that 10 years down the road, by which time you should have other cards that will take it place so you aren’t affected when it falls off your report.

    As I said in the post and she is correct (well, sort of, she says your “total debt” will go up, why in the world would your total debt go up if you close a card? I’m assuming she means your debt to credit ratio, aka your credit utilization ratio will go up) in that if you lose the credit line then closing an account will make your utilization ratio go up, which will lower your score. However if you are able to transfer that credit line to another card (easily done with AMEX and Chase for example) then closing won’t affect your score at all.

    She also says not to switch cards if you are looking for a car loan or mortgage in the next 6-12 months. I had no problem getting top-notch rates for that even while playing the churning game in full-force and you won’t either if you play the game properly so as not to affect your score negatively.

    ReplyReply
  27. nitantel Says:
    27

    Does the 3BM work when the report they normally pull from is frozen?

    ReplyReply
  28. Robert Says:
    28

    Dan,

    Good informative article. When I was in school one of the easiest cards to get was the AMEX student card, they checked to ensure I was enrolled, but cared little about my income (less than $1,000 a month). Within 6 months I was bombarded with CC offers. Student cards are a great way to start a credit history (even with annual fee) as long as you pay on time.

    ReplyReply
  29. Aron Says:
    29

    Hi, Dan

    Thank you for the useful info. Whats the best and least expensive place to monitor my credit score?

    ReplyReply
  30. Thanx 4 the touch pad! Says:
    30

    Until when will the continental one pass card with the 30k/50 offer be available? im thinking of churning it. Also how long should I wait between the exact same chase card?

    ReplyReply
  31. al Says:
    31

    although the inquiry wont lower your score by much, it has still been the reason i was turned down twice for cc’s. too many inquiries were a problem for me even though my experian score is 748 (excellent catagory)
    any ideas for me?

    ReplyReply
  32. fred Says:
    32

    @Dan:

    The thing you forgot to mention is that the key is to jump on the high mileage offers and hold the gun on the run-of-the-mill offers. This past 12 months I have 5 inquiries on my report(I’m in jersey so unfortunately they are all on experian). For my 5 inquiries I have ; 185k amex mr (1 hit with 2 browser method premier 75k+bus. Gold 100k+10k retention bonus); 240k AA miles (1 personal 2 business 75k offers +15k retention bonuses); 60k thank you points (50k premier rewards+ 10k retention bonus) so for 5 inquiries in a 12 month period I have 6 cards and 485k miles/points! Since I did the same for my wife we now have 970k miles/points in just 12 months with very minimal damage to our credit reports. Especially since 3 of the cards are business cards our credit report shows just 3 new accounts opened and since amex reports new cards with the date of your first amex card (in my case 2003) there are really only 2 “new” accounts showing on our reports. So I just wanted to point out that the game can be played very well with very minimal damage to your report. I actually did an analysis of my score and if I would have ZERO inquiries my score would go up 19 points from 762 to 781(but hey if you are going to have ZERO inquiries then what’s the point of having credit in the first place!!) The difference between having 1 inquiry and 5 inquiries was 9 points so my 5 inquiries lowered my score from 771 to 762 and for that I got about a half million miles worth about 8-9 thousand dollars. I’d say its worth it.

    ReplyReply
  33. yidel Says:
    33

    Hey Dan thanks for all the info.

    If I have a card which I almost never use (and there’s no option of transeferring credit etc.), is it worse to close the account or is it worse to keep it open and not use it at all?

    Which harms my credit more?

    ReplyReply
  34. nitantel Says:
    34

    @fred:

    This is great man!!!!

    ReplyReply
  35. lrgfc Says:
    35

    @Dan: Hi Dan, I called them again, they do not pull my report for increasing CL. But for my case, i can not request within 60 days of opening new card. I also asked about whether I could transfered all CL from my already closed credict cards. They told me cause my card is canceled within one months also. He could reactivate that card and transfered CLs then close it. I wonder will it hurt a lot of my credit history or I should ask for it?

    ReplyReply
  36. H-man Says:
    36

    Dan, I never use it at all. I would want to keep it open not to ruin my credit score.

    ReplyReply
  37. Dan Says:
    37

    @nitantel:
    It can still work, but it’s a little tougher.

    @Aron:
    Citi has a $4.95 deal but it’s FAKO.

    @Thanx 4 the touch pad!:
    It shouldn’t be going away anytime soon.
    There is no exact timeframe.

    @al:
    Freeze 2 of your reports.

    @fred:
    Well done!

    @yidel:
    Leave it open unless there’s an annual fee.

    @lrgfc:
    YMMV

    @H-man:
    Unless they will allow you to convert it to a no annual fee card I would just close it.

    ReplyReply
  38. To Dan Says:
    38

    Dan,

    You wrote:

    “But why not use your miles to explore and learn to appreciate the amazing world that G-d has given us?”

    Well, for starters, let’s not forget that not everyone has the time to take multiple trips around the world.

    Furthermore, not everyone likes flying. I personally hate it, and so does my wife. Make no mistake, we love getting to our destination, but we hate the flying part.

    Vacations are wonderful, but only 2-3 times a year.

    Therefore, when my wife and I have collected more miles and points than we will ever use, the only logical conclusion was to sell them, and sell them we did. (and we made a hefty 15k to boot)

    ReplyReply
  39. Aron Says:
    39

    @Dan: Thank You is that what u recommend using for the most accurate info that the cc companies use?Isnt fico better? @Dan:

    ReplyReply
  40. Dan Says:
    40

    @To Dan:
    You probably hate flying because you fly in coach packed in like sardines. If you used the miles to travel in business or first I doubt you would hate it all that much…

    Congrats on making $15K!

    ReplyReply
  41. Moshe Says:
    41

    Hi Dan:
    I have the British Airways for both me and my wife. I was planning on cancelling before the year was up so we wont have to pay the yearly fee again. Are you saying i can call chase or vise and transfer the credit lines from those cards to other cards i have; and it will not affect my credit at all if i close them?

    ReplyReply
  42. mister ukulele Says:
    42

    Does AMEX let you transfer credit line from a business card into a personal one?
    Does citi let you transfer cl as easily as amex?

    ReplyReply
  43. sam1 Says:
    43

    Dan was looking for this info for a while thanks. I just was wondering is the amex cards different since they dont have a credit limit(charge card) how does that effect your debt to credit ratio? Does it hurt your credit less or more then a reg cc if u close?

    ReplyReply
  44. Leah Says:
    44

    hey i opened up 2 amex gold cards this year, closed one of them and am planning on downgrading the other one before the year is up, i also wanted to sign up for a platinum now, and will cancel after 3 months, is that bad for my credit?

    ReplyReply
  45. shim Says:
    45

    i have a business card in my name, if i apply in my wifes name, would she also get the bonus?
    thanks

    ReplyReply
  46. mister ukulele Says:
    46

    Does Dan stop replying a certain amount of time after he posts the article?

    ReplyReply
  47. Amy Says:
    47

    Dan – pardon my ignorance, but what does “churning” mean?
    Does checking out my credit line lower my credit?
    Also, I have several cc, pay in full each month, TRY to pay on time, but have problems with home equity loan and home mortgage. Just settled home equity loan but still waiting for loan modification on home mortgage. My credit is probably killed by now, right? Or wrong? Do I dare check? and if yes, with who (I live in NY). THanks for all this info!!

    ReplyReply
  48. Mark Says:
    48

    Dan,

    I saw an interesting add for CREDIT KARMA. It says absolutely free credit checking and monitoring. Is this place reliable? Would this hurt my credit everytime it checks my score and changes?

    ReplyReply
  49. mannygreen Says:
    49

    hi Dan, i’m new at this please explain to me what is CHURNING??

    ReplyReply
  50. milesfreak Says:
    50

    hi Dan. Will the CC company do a “hard pull” if i am merely transferring an existing line of credit to sign up for a new card? Also, does the multiple browser method work to get approved for more than 1 of the same card or just minimizes the amount of inquiries when applying for various cards simultaneously? Thanx for ur great work Dan!

    ReplyReply
  51. Dan Says:
    51

    @Moshe:
    Correct.

    @mister ukulele:
    No.

    @Mark:
    It’s not your real FICO score, just a FAKO.

    @mannygreen:
    Getting the miles again on the same card.

    @milesfreak:
    The hard pull is done when you apply for the new card.

    It’s for 1 pull when applying for different cards from the same bank.

    ReplyReply
  52. amex no longer Says:
    52

    I just got added to a amex card as a additional user, but looking at my credit report it shows the date opened as of now, I called amex credit, and they told me that the new policy is that the date opened is the date that the au was added.

    ReplyReply
  53. manny Says:
    53

    hi
    thsnks for ALL your help,
    i’m 25 yrs , with a freedom,sapphire,amex blue cash ,capital one ,apple bank visa ,
    psying on time for the past 5 years ,
    y is my limit $8k (on freedom,on other cc its less ), how can i increase it without hurting my credit score ?

    ReplyReply
  54. Keven Says:
    54

    Dan, i am loving your website! thanks! just to be sure i have two chase freedom cards. I can transfer my credit line from one to the other. close the account i transferred from and it will not effect my credit score?

    ReplyReply
  55. Redbull3 Says:
    55

    It is worth noting that your credit score is just 1 of many pieces of data used by credit card companies when deciding to approve.

    ReplyReply
  56. Nash Says:
    56

    Wats the best cc to open right wen someone turns 18???

    ReplyReply

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