Is keeping old credit cards and opening new credit cards with high limits and never using an ideal way to boost credit scores?

Question

I was always under the impression to never close a credit card as it can hurt credit. Especially, if you have had it for a long time.

I've also heard that never going over 10-20% of a credit card is good. Since it it possible to open up a credit card with a high limits from web applications, since they don't verify income statements, would it make sense to open new ones every 6 months or so and then never use them or use them very little as a way to just use them for credit building.

It seems like having a lot of credit to your name and never using it makes for a good way to build up credit.

Answer 1

Problems with your plan (in no particular order)

• there is a limit, once they have decided that you have enough credit they won't offer any more.

• If the economy changes (like it did in 2008) they can reduce the limit on existing accounts.

• If you don't use them, they may decide to close them.

• Using existing cards will encourage the bank to increase the limit on that card.

• opening cards can make some lenders nervous. Having a new card close to when you are applying for a mortgage or a car loan can make them less likely to lend you the max.

You have to decide: Are you trying to buildup your credit limit? or your credit score?

Answer 2

I disagree with the reply. Your both impressions are correct. - Do not close old credit cards because they keep your credit rating high (fico score) - Also low utilization that credit cards report to credit rating companies, improves your rating.

Answer 3

Your plan will work to increase your total credit capacity (good for your credit score) and reduce your utilization (also good). As mentioned, you will need to be careful to use these cards periodically or they will get closed, but it will work.

The question is whether this will help you or not. In addition to credit capacity and utilization, your credit score looks at things like

1. Average age of your credit accounts
2. Number of hard pulls in your credit in the last year or so
3. Your overall mix of revolving (credit card) and other types of debt

These factors may hurt you as you continue to open accounts. You can easily get to the stage where your score is not benefitting much from increased capacity and it is getting hurt a lot by pulls and low average age.

BTW you are correct that closing accounts generally hurts your score. It probably reduces average age, may reduce maximum age, reduces your capacity, and increases your utilization.