Warning... Cancel Old CC and Replace With New = 48pt Credit Score Drop (YMMV)

[Jucius Maximus]

I decided to cancel my oldest credit card (from 2001) because I did not want to pay the 35 dollar fee. I replaced it with a new one, with approximately double the limit.

My credit score, according to the Transunion site, then dropped by 48 points. This is because:
1. My oldest account is now closed. (Next oldest cc was from 2002.)
2. I have an open account less than 1 year old.

I have a 100% spotless repayment history and no bankruptcies, so let this be a warning for those who want to shift around your credit cards. It could hurt you if you are applying for loans after that.

[Drew_W]

It's a well known fact that when you do something like this that lowers the average age of your accounts that your credit score will drop.

[lofidelity]

I just called TD and asked them to upgrade my credit card from the Green card I had before to something better. Will this affect my credit score?

[Drew_W]

I just called TD and asked them to upgrade my credit card from the Green card I had before to something better. Will this affect my credit score?

I don't think so. They just transfer your account to another card. They don't close/reopen.

[myapple]

BMO decided to replace my 8yr+ mosaik card because I shopped at winners a few months ago. Do you think this will affect credit score? Because technically, it's a new number.

[Drew_W]

BMO decided to replace my 8yr+ mosaik card because I shopped at winners a few months ago. Do you think this will affect credit score? Because technically, it's a new number.

It's the same file.

[TrevorK]

I'll never understand the fascination with credit scores. It's not some competition to get the highest number out of all of your friends.

Pay your bills, and you'll be fine. Who cares if it drops a bit? Provided you have a good history you won't suffer any adverse effects.

[weedb0y]

As long as its the same file, why would it?

New application would definitely vs a older card.

[adamtheman]

I'll never understand the fascination with credit scores. It's not some competition to get the highest number out of all of your friends.

Pay your bills, and you'll be fine. Who cares if it drops a bit? Provided you have a good history you won't suffer any adverse effects.

Although I used to somewhat care about my credit rating, I agree with you now... I stopped worrying about it a long time ago. Now I apply for as many cards as I want, when I want and just keep paying my bills on time. My credit score has only dropped 45 the whole time and I'm fine with that. I now sit at around 670.

[dark169]

I'll never understand the fascination with credit scores. It's not some competition to get the highest number out of all of your friends.

Pay your bills, and you'll be fine. Who cares if it drops a bit? Provided you have a good history you won't suffer any adverse effects.

Its the e-penis of personal finance forums, much like cpu speed or car specs. In real life if you have ok to good credit the actual number falls in a pretty large range.

Of course spending the money to see the score drop tanks to 1 transaction shows ones inability to not sweat the little things.

[majesus]

The beacon score is extremely flawed. While it is understandable what they are trying to do: design a scoring method that determines your credit worthiness. Yet, here are a few situations that will drop your score but doesn’t reflect your responsibilities with credit at all:

1) Suppose you want to take a mortgage out, wouldn't you want to shop around? Each time you go to a different bank or broker and they do a credit check, that dings you. The idea behind the ding is that if you are getting too many credit checks, then you are trying to acquire to a lot of credit fast... That can be true in certain situations. Well in this case, all you are doing is looking for a solid mortgage, however, your credit score drops each time you shop around.


2) Situation of the OP. THey have an old CC. Lots of people keep their old CC (I do, and I never use it) because it shows you are an established client and it brings up the Credit Score. However in the OP's case, they don't want to pay the CC’s annual fee, so they change it. Does that show they irresponsible? No, but thier score dropped.

3) High Debt to Credit Ratio. What if you take advantage of MBNA and CITI 0% promotion for a year and drop the money in a high yield savings account. Money is there, but you look like you have a loan and may be in a high debt to credit situation. That looks risky... but you have the money in a very low risk investment and you pay off the CC statements each month. A very responsible person, however because you are in a high debt to credit situation, your score drops.


I just want to mention that it can be easily arguable the reasons behind the scoring scheme, which can very true. It is however too difficult to make a scoring scheme that fit everyone because there is way too many variables that are specifically based on each individual.

Sometimes a person will pay all their bills on time, never have missed a payment, yet because they want to take advantage of different CC offers, promotions, they may cycle through these. Ontop of that, they borrow money on their 0% interest rates, look for a mortgage, and may have a car loan or a line of credit and then when they see their credit score they are like: :eek:

The good thing is that a lot of banks and brokers will look at your score just to get a general sense and then view your actual credit history in detail to get a lot more useful information. However, it is a little bit more difficult when you want your credit card limit increased or want PC to give you overdraft... :rolleyes:

Anyways, that is just an observation on the system. It does have its goods, and naturally its bads.

[frankal101]

is your score negatively affected when you request a credit report for yourself from someone like equifax? Does it count as an inquiry when you want to see where you stand?

thanks

[HammerTime]

No - you can check out your report and score for yourself and it will not effect your score.

[mjohare]

No - you can check out your report and score for yourself and it will not effect your score.

Do you have to pay to get your report or see your score?

And how do you do this anyway?

[Drew_W]

Do you have to pay to get your report or see your score?

And how do you do this anyway?

Please search the forum - this is a very common topic of discussion.

[Neovingian]

The beacon score is extremely flawed. While it is understandable what they are trying to do: design a scoring method that determines your credit worthiness. Yet, here are a few situations that will drop your score but doesn’t reflect your responsibilities with credit at all:

1) Suppose you want to take a mortgage out, wouldn't you want to shop around? Each time you go to a different bank or broker and they do a credit check, that dings you. The idea behind the ding is that if you are getting too many credit checks, then you are trying to acquire to a lot of credit fast... That can be true in certain situations. Well in this case, all you are doing is looking for a solid mortgage, however, your credit score drops each time you shop around.

Anyways, that is just an observation on the system. It does have its goods, and naturally its bads.....I've heard that there is a window of about 3-5 days where you can apply for credit with several lenders when shopping around for mortages / loans before it gets reported to the bureaus. Thus if you seek out 4 or 5 mortages in a 1-2 day perioid you may not get dinged yet because the credit reporting agencies would not have updated your file fast enough to reflect the additional hits. This is risky but I've been told it could theoretically work.

Anyone else heard this before or know if there is truth to this?

[don242]

Do you have to pay to get your report or see your score?

And how do you do this anyway?

You can request your credit reports (does not include score) for free once a year from Equifax and TransUnion. You usually have to pay to get your score.

[alysomji]

Do you have to pay to get your report or see your score?

And how do you do this anyway?

All explained here: http://www.equifax.com/EFX_Canada/

[majesus]

....I've heard that there is a window of about 3-5 days where you can apply for credit with several lenders when shopping around for mortages / loans before it gets reported to the bureaus. Thus if you seek out 4 or 5 mortages in a 1-2 day perioid you may not get dinged yet because the credit reporting agencies would not have updated your file fast enough to reflect the additional hits. This is risky but I've been told it could theoretically work.

Anyone else heard this before or know if there is truth to this?

Interesting point.

[regrus]

I'll never understand the fascination with credit scores. It's not some competition to get the highest number out of all of your friends.

Pay your bills, and you'll be fine. Who cares if it drops a bit? Provided you have a good history you won't suffer any adverse effects.

Your credit score is getting more and more important as companies grant credit using computers rather than people to make decisions.

For example I walked into a Harley Davidson dealership in Alberta on a Saturday afternoon. Bought a 30,000.00 motorcycle, filled in a credit application and my purchase was approved thru Harley Davidson credit in Carson City Nevada within 15 minutes.

I was told no real person looks at my credit application. My information was just entered into a computer program. Wam out comes a score. If your over the number you get your bike if your under you walk.

[Crowbarfoot]

1) Suppose you want to take a mortgage out, wouldn't you want to shop around? Each time you go to a different bank or broker and they do a credit check, that dings you. The idea behind the ding is that if you are getting too many credit checks, then you are trying to acquire to a lot of credit fast... That can be true in certain situations. Well in this case, all you are doing is looking for a solid mortgage, however, your credit score drops each time you shop around.
.



....I've heard that there is a window of about 3-5 days where you can apply for credit with several lenders when shopping around for mortages / loans before it gets reported to the bureaus. Thus if you seek out 4 or 5 mortages in a 1-2 day perioid you may not get dinged yet because the credit reporting agencies would not have updated your file fast enough to reflect the additional hits. This is risky but I've been told it could theoretically work.

Anyone else heard this before or know if there is truth to this?


As far as I know you are allowed to apply for a single product, MTG, car loan etc over a small window of time and the system will only treat this as one instance. Of course shopping around makes sense and they know that. Its actually how the system is designed.

http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf

Page 14 tells you to shop for a loan in a period of time as the system will distinguish between a search for a single loan or different credit products.

~C

[Monsoon]

I decided to cancel my oldest credit card (from 2001) because I did not want to pay the 35 dollar fee.

If you had it that long and were a perfect customer you probably could have gotten them to waive the annual fee.

[majesus]

As far as I know you are allowed to apply for a single product, MTG, car loan etc over a small window of time and the system will only treat this as one instance. Of course shopping around makes sense and they know that. Its actually how the system is designed.

http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf

Page 14 tells you to shop for a loan in a period of time as the system will distinguish between a search for a single loan or different credit products.

~C

Good. I'm glad to know that. Funny how a few Mortgage brokers have insisted I don't shop around to keep my Score up. Even thou I didn't listen to them... I'm really glad you told me. Thanks big time Crowbarfoot. You rock! :)

[st7860]

you can shop around for mortgages and apply for a ton of cards, for the average person a few points wont matter.

for someone who VERY RECENTLY got his first credit card, DO NOT DO THAT. it matters a lot.

[Shaf]

I'll never understand the fascination with credit scores. It's not some competition to get the highest number out of all of your friends.

Pay your bills, and you'll be fine. Who cares if it drops a bit? Provided you have a good history you won't suffer any adverse effects.

exactly