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I took a hit on my student loans when I graduated into an economy without work, so my credit score went into the tanker a bit. Since then I've been making all my payments, everywhere, on time. Now my credit score is apparently 720 or so according to Credit Karma.

  1. I have a credit card that costs about $30/year but doesn't have a huge limit or anything -- am I better off closing this account? I don't really NEED credit cards and usually go out of my way to find an excuse to use it and then pay it off immediately. I use it purely for making a credit history. However, I don't like having an annual cost but I hear closing a credit card account can hurt your credit. What should I do?

  2. How come, despite having an apparent 720, it shows my acceptance odds for certain common cards like Chase Slate as "poor"?

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    If you really don't need credit cards, I wouldn't worry about your acceptance odds for any cards. – DJClayworth Sep 11 '12 at 15:27
  • Well, I mean I worry about, later on in life, needing to take out a mortgage or something – IAmBatman Sep 11 '12 at 15:36
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    Does the bank that you have the credit card with also offer a different kind of card with no annual fee? Maybe you can switch the card over to the no fee option. I've done this. Essentially, I didn't want to pay for a rewards program I was hardly using, so I switched to the no-frills, no-fee card at the same bank. – Chris W. Rea Sep 11 '12 at 19:33
  • Some cards specifically target people in the 600 to 700 score range. They are higher risk for the bank, but their interest rates are sufficiently high that the banks actually make a huge profit off of them on average. Others are aimed at the 800+ crowd which are low risk. Your acceptance for a card is likely to be highest for the cards being marketed at your bracket. Personally, I have had no cards in over 10 years and no debts at all in seven. Life is much better without debt. – pojo-guy Sep 4 '17 at 4:06
  • Don't worry about your credit score. It is not nearly as important as many companies would have you believe (mostly because they want you to be confused about it so you'll follow their advice and open up more accounts with them). Stop wasting money on a credit card with an annual fee. – Glen Pierce Sep 4 '17 at 4:28
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The two factors that will hurt you the most is the age of the credit account, and your available credit to debt ratio.

Removing an older account takes that account out of the equation of calculating your overall credit score, which can hurt significantly, especially if that is the only, or one of just a couple, of open credit lines you have available.

Reducing your available credit will make your current debt look bigger than what it was before you closed your account. Going over a certain percentage for your debt to available credit can make you look less favorable to lenders.

[As stated above, closing a credit card does remove it from the credit utilization calculation which can raise your debt/credit ratio. It does not, however; affect the average age of credit cards. Even closed accounts stay on your credit report for ten years and are credited toward average age of cards. When the closed credit card falls off your report, only then, will the average age of credit cards be recalculated.]

And may I suggest getting your free credit report from https://www.annualcreditreport.com . It's the only place considered 'official' to receive your free annual credit report as told by the FTC. Going to other 3rd party sites to pull your credit report can risk your information being traded or sold.

EDIT: To answer your second point, there are numerous factors that banks and creditors will consider depending on the type of card you're applying for. The heavier the personal rewards (cash back, flyer miles, discounts, etc.) the bigger the stipulation. Some factors to consider are your income to debt ratio, income to available credit ratio, number of revolving lines of credit, debt to available credit ratio, available credit to debt ratio, and whether or not you have sufficient equity and/or assets to cover both your debt and available credit.

They want to make sure that if you go crazy and max out all of your lines of credit, that you are capable of paying it all back in a sufficient amount of time. In other words, your volatility as a debt-consumer.

  • The credit report simply lists the open accounts and payment history. No 'credit utilization' 'ave account age,' etc. The Credit Karma snapshot is as close as I've seen to a readily available 'score'. (not exactly FICO, but close) – JTP - Apologise to Monica Sep 11 '12 at 20:43
  • I was going to add 'stolen' to the list, however I refrained. creditkarma's privacy policy states that it needs to send your private data to other 3rd party company to obtain your information. Automatically that's 2 companies that now have your private data. Any person's goal should be to limit how many servers their name, address, social security number, answers to secret questions and such to as little servers as possible to reduce the risk of identity theft. – Mechaflash Sep 11 '12 at 20:56
  • Agreed, I still struggle with the uncommented downvotes. And I should have been clear I was a +1. – JTP - Apologise to Monica Sep 12 '12 at 20:12
  • This "Removing an older account takes that account out of the equation of calculating your overall credit score" imay not correct. I believe it does factor into the average age of accounts – Eric Sep 4 '17 at 6:38

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