It all depends but here is a general idea.
First you get an inquiry hit:
If you have no previous inquires to just a couple? then it will not cause anything to happen.
If you have 5 or more inquiries in a short time? drop 2-10 points depending on who's calculating.
If you have a lot of inquiries? Every inquire you do is going to knock a few points off your score and they become accumulative or the points the points that come off grow by a factor of 1.5(about).
Second, The new account.
Just having a new account won't hurt or improve your score. But if the new account has a credit limit way lower than your other cards then you will take a small hit on the score, because it increase you debt to credit ratio score per card. But if its a credit line much higher than your other cards?, then you get a score boost of a few points. If thats the case then don't get rid of the card.
Third, closing the account.
This one is really hard to judge.
Low limit cards as compared to your other cards will most likely do nothing points wise, worst case its a 5 point drop. But it a very temp drop. It will rebound in a couple of months.
Closing a high limit card will put a good size dent in your score. About 10-25 points. But then again its just a temp score drop, it will rebound fairly quickly.
I have done this occasionally and it rarely ever causes me any damage, but it all depends on everything else thats in your reports.
One trick is to open a card, do what you have to to get the reward. Then cancel the card as fast as you can.
Then dispute the new account on your report and have it removed. Very easy.
I learned this trick a few years ago when I applied for a crapone card. They gave me a 500 limit, all my other cards were in the mid 20's for limits. So I activated it, purchased the required amount, collected the 100 dollar reward and then paid off the card online . Then the next day called in and canceled the card. Then dispute the new account with the CRA's. shortly the account is gone for good.
If your like me. Where you are at a point in your life where you really don't use credit, it can be fun to mess with your scores and see what you can do.
But if you are young and need to have a great score for a future home purchase or car purchase, don't mess with it. It's not worth the effort. Just work on keeping your scores as high as you can get them.
Another thing to keep in mind is this. With the current credit markets in a bit of a mess, your CC companies are watching your scores as much as you are. If they see some activity they don't like? You might get a very friendly letter stating " Dear Mr. Smith,
In these economic hard times it worries us as a responsible creditor that some of our customers may be over burdened by excessive debt or potential debt. In an effort not to place this burden on you we have lowered your 30K limit to 500 dollars. We think you will agree that excessive debt is not in anyones best interest. Have a great day and thank you for being a great customer."
Then when your new credit limit hits your report, Bam! Credit hit and then your other creditors start to send you friendly letters and then it starts to snowball.
I have seen peoples scores go from the high 700's down to the low 600's with the unexpected side effects of an AOR.
Creditors are real jumpy at the present time, I wouldn't do anything that might jeopardies yourself. One or 2 cards a year may not hurt, but it all depends on your luck.
