CNN: “Don’t sweat it: Canceling a credit card won’t hurt your score”

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This is something that I’ve always known.  I’ve opened and closed hundreds of credit cards and still have a pristine credit score along with millions of miles and free first class tickets around the world in 5 star hotels…Which is probably exactly why they want you to think it’s bad for you ;)

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36 Comments on "CNN: “Don’t sweat it: Canceling a credit card won’t hurt your score”"

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sam

I was just declined a credit card because I had applied for 3 starwood cards in the past 2 years and closed them all

I have a 8 year credit history with a score of 750

Muttman

Does opening one hurt your credit?

AhPoshiterYid

As stated by many comments on that article, the title is extremely misleading. If you have only a few cards, closing even one can have a significant effect. Dan, it might be hard for you to believe, but not everyone has a shelf-full of credit cards! :D jkjk
http://www.dansdeals.com/wp-content/uploads/2009/04/IMG_1093b.jpg

Dan/Ctownbochur

@sam:
Which card were you denied for?

@Muttman:
It does temporarily when you open it, but the benefit from having another card with more total credit and lower credit utilization quickly outweights the small hit from the application’s “hard credit pull.”

@AhPoshiterYid:
That’s last year’s shelf, now there are too many to fit on the shelf…

The comments correctly point out that when you close a card your credit utilization percentage will go up. However any good Dansdeals reader know that before closing the card you are supposed to transfer as much credit out of the card as possible before cancelling.

By transferring the credit line to another card you effectively keep your credit utilization percentage roughly the same. For example I have 3 AA cards right now with $125,000 of credit. If I have $5,000 in spending credit utilization percentage is 4%. If I close one with a $50,000 limit my utilization percentage will shoot up to 15% which will have a negative affect, but by transferring $45,000 of that limit to another AA card the effects of closing the card are small to none.

The article points out the card’s history will stay on the report and not be lost for at least 7 years, which by then you’ll have other cards 7 years old so it won’t matter.

dy

If you close a card your record for that card remains frozen, therefore a late payment you might have made 5 years ago, will still show as it was in the last 24 months of that card. If the card remain open, the late payment will slide away.

moshe

@Dan/Ctownbochur: does citi allow you to transfer credit lines? because i tried a few weeks ago and they didnt allow… or is there a special phone # that would allow me to do it???

Dan/Ctownbochur

@dy:
Never heard of that before, where did you see that?

Dan/Ctownbochur

@moshe:
Yes, ask for a manager and don’t take no for an answer.

tzvi

after you close the account how do you transfer the points to the new acct that you open?

Dan/Ctownbochur

@tzvi:
Miles and points generally are sent directly over to the airline/hotel every month and are not affected at all by the closing of a linked credit card account.

tzvi

for the spg card will they let me open a card for my wife and then after i get my bonus consolidate the points to the acct i already i have?

zalman

@Dan/Ctownbochur: Thanks for the article. I was always worried bc of this reason, so nice to know its not true.
what does transferring a credit line mean? can you only do it from one credit card to another within the same bank/company? if so what if you have two unrelated cards from different companies?

wtvrmob

@Dan/Ctownbochur:
Are you sure citi still lest you reallocate credit lines. I know amex stopped even with a manger since the new laws came out in febuary

Daniel

@Dan/Ctownbochur:

That’s only good for citi- to transfer credit lines- but what’s your strategy for AMEX & Chase? Downgrade the card? How many AMEX blue cards can you have before they get suspicious?

bochur

amex will not let you transfer credit lines anymore
so if u close a card u lose that credit line

Dan/Ctownbochur

@tzvi:
Absolutely-Starpoint transfers are easy and free!

@wtvrmob:
I’ve been able to transfer credit lines and switch credit card types at AMEX, Chase, and Citi. It just takes a lot of persistance sometimes to find the right rep to get it done.

Daniel

@Dan/Ctownbochur:

Dan, I assume you mean you have done this recently? That’s really impressive.

Dan/Ctownbochur

@Daniel:
Yes, you may need to talk to higher-ups or email them but it can be done.

Daniel

@Dan/Ctownbochur:

With which banks has e-mail worked? I’ve tried citi, but they tell you to call.

danny

Dan, still on the same app schedule for citi and all other cc’s? Or have you slowed down due to the fact that its not as easy to get approved nowadays?

Daniel

@danny:

danny, citi churning is over. Hop on to the forums to keep up to date

dy

@Dan/Ctownbochur: Unfortunately, on my credit report.

Sholom

Does anyone know about opening and closing bank accounts? I read somewhere that they can do a credit pull whenever you open a bank account

yehuda

Dan, in a nutshell, is it better for my credit score to keep my old cards or to cancel them? In other words, if I have old cards with no annual fee, is there any reason to cancel them or should I just keep them? Thank you for everything you do.

Dan/Ctownbochur

@Sholom:
It depends on the bank, some do a hard pull, others don’t.

@yehuda:
If there’s no annual fee then by all means leave them open. The only reason to close cards is to avoid the annual fee.

Sholom

Thanks Dan! specifically, do you know if Chase does? (Me and my wife opened accounts for the continental deal, and we are thinking about opening business accounts.) Are there any bank that you would stay away from because of a hard pull?

how

Sholom Says:

@Sholom: specifically, do you know if Chase does?

i tried opening a chase checking account and the rejected me based on my credit report

Daniel

@how:

I have never seen a hard pull from Chase for a bank account opening. They may have a way of checking your score without an official pull. Or else I’m stumped as to why “how” would have gotten rejected.

Anonymous

@Dan/Ctownbochur:

Dan, I tried transferring credit from one of my AMEX cards to another AMEX, and AMEX said they don’t do that any more.

Mordy

@Sholom:
Both my wife and I opened up 4 accounts each in the past 6 months (2 personal and 2 businesss) and there were no credit inquiries.
Could be because we had existing bank accounts and credit cards by them.

meyer

Dan: what about the fact that when you close a card you’re lowering the average credit history (age)?

Dan/Ctownbochur

@meyer:
Read the CNN article…

tzvi

does amex let you consolidate 2 accts mine and my wifes?

Dan/deals/fan

So if I have just 2 cards could I close 1 is w/o I being bad for my credit has a fee.
And how do I get amx to lower my credit line be4 I close

Sholom

@Mordy: Thanks!

HSS

@Dan/Ctownbochur:

Dan,

I currently have 3 AA Cards with Citi which has approximately 10,000 on each but I check my credit report regularly and Citi has never reported my credit lines only thing they report is highest used amount. So in essence regarding Credit Utilization Citi doesnt help you when you have credit and in turn won’t hurt you if you close it, in my experience. Does Citi report your credit line on your credit report? I use Citi’s Identity Monitor’s free monthly trials regularly to check my score and report, have you had a different experience with Citi CC’s?

HSS

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