Does closing a credit card and getting a one effect one's credit history? how?
Answers:
If the card you are closing has been open for a long time (or is your oldest or one of) closing it could bring down your score. Don't close it! If this is the case consider keeping it open and getting the new card. Paying off the card should benefit your credit. The new card may bring your score down temporally until you prove you can pay it (pay for several months on time) then the score should increase.
The credit bureau using different models so many factors determine your score. It is hard to tell what will happen in your case. *Another Tip* if your balance is very close to your credit limit consider splitting the balance between the two cards. Try to keep you balance below 35% of your limit. ((I.E. limit is $2500 balance should be below $900)) this will improve your scores. If you pull your credit and notice that the high credit is not reporting the correct amount you should contact the creditor then the credit bureau reporting the error.
Yes..closing the cards actually hurts your credit. Everytime you apply for a card it goes on your credit that you tried. If you fail to get one and apply 20 times and are refused it does damage your credit score.
Credit cards will help your credit history if you use it wisely.
Rather than closing one, you can cut it up and now use it anymore. That way your line of credit is still open, but you don't owe the banks any money.
Just be sure to never have your balances over half of the credit line and always make your payments on time. Also, try to pay it off each month, or as much as you can manage.
I was told that by leaving the card dormant, they will not notice any activities on there. If you will close it, close it when you are not going to borrow or apply for any loan. And the same as applying for a new credit card, if you are going to apply for a mortgage loan or car loan, it is wise to just leave everything as is - of course timely payment is crucial, but new account is not beneficial either. Dormancy is the best clue - they like it that way on your old ones. I guess it showed that you are approved on a lot of things, although you're not using them is a good sign of good behaviour.
Yes. Part of your FICO score is determined by the length that accounts have been open. Closing a credit account and opening a new account both reduce your average account length, lowering your score. This is only one of several factors that credit reporting agencies (the big 3 are Equifax, TransUnion, and Experian) look at when determining your score. The exact formulas they use are not released to the public, but you can get an idea of how credit scores are determined, which will help you understand how to maintain a good rating and how to increase your score.
A few other factors they look for are on-time & late payments, balance to credit limit ratios, and types of credit (e.g. secured such as a mortgage, or unsecured such as a credit card).
Each of these 3 companies should have information available that will help you understand your credit rating. Clark Howard's site is also a great resource.
yes, it depends on what you are closing...if you have had the card for (in general) 3+ years, it will hurt your score to close it in two ways...
1. opening new lines of credit will lower your score no matter what
2. closing existing lines of credit, that are in good standing, that are greater than 3 year history, will hurt your score b/c the powers that be would like to see that you have long term relationships with creditors and obviously that you pay your bills..
there is also another factor that may or may not effect this...
your total debt to the total available credit line...the closer you are to the max the lower the score...so if you close one line, given the same amount of debt your ratio will be higher thus your score will be lower..
also another generalization.cards with less the 1 yr history will have a negative impact on your score.
lastly, to get the new card they will have to pull credit on you and this alone will hurt your score.
FYI: it's impossible to quantify by exactly how much this will lower your score there are 3 agencies and 10 scoring models and thousands of other factors that come in to play...however
given these factors and average credit figure -20-60 points..
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