In general, the scoring model rewards those with:
- A variety of types of credit (installment, revolving, car, mortgage, etc.).
- Long history with this credit (very high scores can only come with this factor.)
- Low debt/limit ratios.
- No negative events (late payments, collections, public records. One single recent negative event, no matter the amount can have a major impact on scores.)
[It’s also important to know that the scoring model sees almost nothing of dollar amounts, only ratios.)
So, IN GENERAL, we can say the more lines the higher the score, up to a point. The difference between no revolving and two revolving accounts is a great deal more than the difference between two revolving and four revolving accounts.
In general, again, two-three credit card accounts with no lates and low balances is going to get you pretty much what you’re going to get from these lines - EXCEPT for the length of time you have a successful history with them. I.e., closing a one year old card hurts you a great deal less than closing a ten year old card.
So you have to look at each situation individually. Closing the same credit card can have quite different results depending on the rest of a person’s history.
What I’m saying on these threads is that in these times, crazy stuff is going on on the credit card side. And, the GENERAL effect of the companies actions lowers folk’s scores.
Which means we have to be more informed with accurate information now to deal with what’s coming at us. Those I trust are recommending keeping almost everything you can open and active because of the volatility - if you have three cards, you don’t know which one you’ll really need when/if the other two go south on you.
I hope this makes more sense.
The two cards I cancelled in the last year - well, actually, 2 years now that I think about it - involved one that had migrated from one company to another until it ended up being the same lender where I held my other card. I don't like having both cards with one entity so I closed it.
The other card was a glorified employer travel card which amounted to being a credit card in my name that I could only use for employer purposes. Useless. When they switched from B of A to Citi, I let it expire and opened another card at another company.
My thought on closing out a card is to open another first, then close the previous one. It helps a great deal if you haven't used it in a while. I closed several idle accounts a few years ago since I wasn't using them. Penney's, Discover, and a couple of others - I hadn't used them in a number of years and yet they were shown to be open accounts on my credit report.
Speaking of credit reports, we are all entitled to get one free credit report from each of the 3 major credit rating agencies each years. You don't get the actual credit score for free, but you get to see how you stand with each acount that you have or have used in the past few years. Great resource - I would check one every 4 months so that you can utilize all 3 without fee and without having a long time span between checks.