I opened my first credit card account with BofA a few years ago. I only use it to build my credit by making small purchases and paying it off as soon as the statement is released. Since this was my first credit card, I wasn't offered any rewards program but it also doesn't have an annual fee. Today, I received my second credit card from Amazon where I get 3 points for every dollar spent on Amazon, 2 for gas, groceries, etc. and 1 for everything else. Also no annual fee. My question is will it help or hurt my credit if I cancel my original BofA credit card since there is no point in continuing to use it when I get rewarded for using the Amazon one.
Posted by Lyrhawn (Member # 7039) on :
Hurt.
Your credit score and history are based on the length of time you've had a line of credit open and the total amount of credit you have available.
Closing the credit account will mean that every dollar you spend on your Amazon card hurts your credit score more than it would otherwise. Plus, the more credit you have available the more credit worthy you look.
Keep it open. Use it occasionally to keep it active.
Posted by Stone_Wolf_ (Member # 8299) on :
What I heard was don't pay it all off...always leave a single dollar owed and your credit will grow 2 to 3 times as quickly.
Posted by MrSquicky (Member # 1802) on :
Two main pieces that go into your credit is length of time of your credit accounts and debt to credit limit ratio.
You'll most likely take a small hit if you close the BoA card, but if it has only been a few years and it has a low credit limit, it will be very small. One thing you do want to keep in mind is that one of the things that damages your credit is having debt of more than 50% of your credit limit on a credit card.
Stone Wolf, It's a common belief that your credit rating goes up if you consistently keep a balance on your credit cards. This is not true.
Posted by King of Men (Member # 6684) on :
quote:Originally posted by Stone_Wolf_: What I heard was don't pay it all off...always leave a single dollar owed and your credit will grow 2 to 3 times as quickly.
This may very well be true, but it would lead to interest charges that could become quite costly, because (IIUC) you get interest on the whole of what you charged if you don't pay off all of it. For a single month you might do so, but not for any lengthy period.
Posted by Kwea (Member # 2199) on :
about 15% of your score is longevity of accounts. If this account doesn't charge a fee, keep it open. Also, a MUCH larger part of your score is how much (as a percent) of your possible credit you are using. Closing an account reduces the about available, and lowers your score.
Posted by Kwea (Member # 2199) on :
No, you get charges interest on what is a balance. Anything else is illegal.
Carrying a balance helps, but mostly for installment loans, not revolving credit like a card.
Posted by dkw (Member # 3264) on :
Many cards offer a non-interest grace period if you pay the balance in full every month. When you carry a balance from month to month you don't get a grace period before interest is charged, it is charged from the day of purchase, which means that you are paying interest on all purchases, not just the amount you carry over.
"If you do not pay your balance in full, you will generally be charged interest on the unpaid portion of the balance, and interest will be charged on purchases in the new billing cycle starting on the date each purchase is made"
UNPAID balance, from the day of the purchase.
Posted by dkw (Member # 3264) on :
And NEW purchases, from the day of purchase. Neither KOM or I was suggesting you'd be back-charged for purchases you'd already paid for. But if you carry a balance interest starts to accrue on your new purchases as soon as you make them. If you have no balance it doesn't.
Posted by scifibum (Member # 7625) on :
I think credit scoring entities are probably way ahead of credit scoring reverse engineering hacks. That being said, it makes sense that you'd look like a good credit risk if your total amount of available credit was much larger than your amount you owed anyone, but still smaller than the amount that would be difficult to carry if it was maxed out.
Posted by MattP (Member # 10495) on :
http://www.credit.com/ will give you a free credit report, with monthly updates, with no strings attached. Part of that credit report is a breakdown on the rough criteria for scoring and which aspects of your credit history brought your score down.