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SUCKISSTAPLES
- Charter Member
posted: Dec. 1, 2008 @ 11:57p 
phoebez said:I suggest that you do your own pruning instead of letting the banks choose which cards you keep.
If you have have 20 credit cards and only really need a few of them, then terminate the ones you don't need. That way, you make the choice for which cards to keep, not the banks.
The banks need to contract credit right now. It's part of the cycle we're in. Help them out.
Plus if you pare down the number of credit cards you have now, then you are positioned to apply for new cards (with sign-up bonuses) in the future.Not a good idea. We dont know and cant predict what action the banks will take. One metric may even be to look at how many closed lines from other issuers someone has as a sign of risk. Dont proactively close anything. |
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SUCKISSTAPLES
- Charter Member
posted: Dec. 2, 2008 @ 12:02a
Mithrin said:
Unless we find out what the criteria are going to be, we can't try to work around them. The best plan is probably to sit tight, and if they do close an account you want to keep, call up and try to negotiate to reopen it (offering to cancel other cards, reduce limits, whatever it is that they are trying to accomplish). I would suggest watching out for your award redemption limits. Pull the rewards out as often as you can, so you don't end up losing out on reward points if accounts do get closed.I agree. Excellent strategy. There have been numerous reports of "clean slate" sweeiping closures where an issuer cuts or closes ALL one's lines. But people HAVE been able to speak to a supervisor to get their most-desired lines reinstated (assuming they were not lying on the application). |
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SlimTim
- Senior Member
posted: Dec. 2, 2008 @ 8:07a
I agree the only concern I have is how this affects FICO scores. I would hope issuers and Fair Isaac are considering another FICO revision. Unless, I suppose, they think those of us with a large number of unused credit lines have been higher risks than previously thought. |
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SUCKISSTAPLES
- Charter Member
posted: Dec. 3, 2008 @ 5:12a
SlimTim said:I agree the only concern I have is how this affects FICO scores. I would hope issuers and Fair Isaac are considering another FICO revision. Unless, I suppose, they think those of us with a large number of unused credit lines have been higher risks than previously thought.Unfortunately these actions can have DRASTIC effects on FICO scores. Lenders are :
1. Closing old, inactive cards. This can hurt FICO, depending on your credit mix.
2. Reducing credit limits on unused cards from $xx,xxx to tiny amounts like $500. This WILL hurt FICO, since your overall utilization will go up and any charges to that card will result in higher utilization.
3. Reducing limits to right above the outstanding balance on a card that has a carried balance- this is causing the GREATEST hit to FICO, as cards that may have been only 20-30% utilized change to 95%+ utilization. This can cause 50+ point FICO drops. |
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DavidScubadiver
- Frivolous Member
posted: Dec. 3, 2008 @ 9:30a
There is a flipside, no? I always get dinged because my outstanding lines of credit are too high, and because I have "too many" accounts. Presumably, I will be seen more favorably if I have less credit and less accounts. My utilization is completely voluntary so I can reduce utilization at any time. |
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