Credit hit for closing recently opened Card??

Don't close the account. Just stop using the card and let it expire when they stop sending you new cards years from now. Account stays open for now, but no business is done.

snipped-for-privacy@hotmail.com wrote: [...]

The previous replies are accurate. However they do not address your customer complaint over perceived poor service.

You clearly wanted the extra card and are only unhappy because they sent you the "wrong one" (whatever that is). Anyone who stands up for customer rights and service is going to pay a personal cost, whether it's waiting on hold, writing a letter, filing a complaint, paying a cancellation fee, whatever.

If you truly have the strength of your conviction that they gave you bad service through no fault of your own, then take whatever small hit to your FICO score you receive (as mentioned, it'll recover), write a letter (paper) to the company CEO, and get them to deal with the problem.

Or, maybe better advice at misc.consumers or alt.consumers.

-Mark Bole

Actually, the best thing to do is make a small charge, around $1, every month, and have them send you the paper statement and pay in full every month.

Great advice! Thanks all for your kind replies.

Heh. I've had a Providian card that I not only haven't used, but haven't activated in many years. They keep sending new ones each expiration date.

Brian

Don't forget it also means you will get better insurance rates, better employment chances, better chance of not needing a deposit when you open utilities, etc. etc.

Perhaps that is true if you really trash you credit. But if you pay your bills on time, you are going to have a hard time not having a 700 or better score. I doubt that my 720 is going to cause me to get any less of a job than what someone with a 770 will get. My auto insurance is $360 every 6 months, and I don't know of anyone who pays less than that. And while I have moved at least 20 times in my life, I have never once been asked to pay a utility deposit. There is no real trick to paying your bills on time.

-john-

I'm with you on this, John. I think a look at one's credit report every so often (one can cycle through the three majors once a year each for free reports) is enough. The FICO-obsessed do border on OCD. I doubt the OP is going to get any worse deal for dropping from 770 to 760 by canceling one card, even if that causes a 10 point drop. I checked my FICO once, for free, high 700. Once was enough. JOE

I just want to add one thing. All the advice given here is based on experimental results, probably with a very small sample size. The actual details of the FICO algorithm are guarded nearly as closely as nuclear launch codes.

In addition, I believe the FICO algorithm is really nonlinear. As such, you can't point to a single input, x, and say your credit score varies directly with x or inversely with x or oppsoite x or whatever. Locally, you can make that claim (as anyone who knows Taylor's Theorem will tell you), but not globally.

What I'm trying to say is that all these little tips and tricks won't necessarily work for you. In fact, they may hurt you, though I doubt it. The point is that no one outside of the Inner Circle (i.e. Fair Isaac) really knows. In light of that, I have to agree with my fellow MIFPers. Don't obsess over it. Do what makes the most financial sense for yourself. As long as you pay your bills on time and aren't drowning in debt, your credit score will be fine.

--Bill

"Bill Woessner" wrote

How do you know this?

One can google for "credit score" and find a multitude of sites that fairly consistently say the same thing about how to maximize it. Asking here is fine, but the original poster would do well to see the extensive discussion on the net on credit scores.

I think it's more accurate to say that the three credit scores computed for an individual (by the three consumer credit reporting agencies, Transunion, Experian and Equifax) all will be significantly affected by certain actions. E.g. keeping a high, not paid off, balance each month that denotes a significant fraction of one's available credit.

Lastly, perhaps somewhat like Weeks, I am tired of the deluded consumer who thinks he/she is commendable for having a high credit score. It does not mean that a person is a saver. It can mean simply that he/she likes taking on a lot of debt. It says nothing about whether this debt is being wisely spent.

To be fair, I don't. But, like I said in my original post, the details of the FICO algorithm are very closely guarded. I highly doubt anyone who's actually privy to those details are going to post them on Usenet. Fair Isaac would sue them faster than you can say "intellectual property".

Maybe, maybe not. My point is you just don't know. Yes, there's plenty of conventional widsom involving the FICO algorithm. But conventional wisdom is not necessarily correct, no matter how many people believe it. There have been

It goes back to my basic point about the complexity of the algorithm. Anyone who claims that "doing x will raise/lower your FICO score" is essentially claiming to have reverse engineered the formula to some degree of accuracy. As a mathematician, I'm suspicious of anyone making such a claim.

--Bill

The details are guarded. The broader themes, however, are discussed pretty openly by Fair Isaac.

Take a look at

the forums that Fair Isaac maintains and moderateson their site. at the first post under "Credit Scoring 101"

It's hard for anyone to actually do that reverse engineering because folks rarely can isolate specific credit events. Nevertheless, while the *magnitude* of a specific event's impact may not be easy to figure out, it's easy to know that certain events are positive or negative, and in some cases that two similar events may have different impacts (ie. closing down a credit card you don't use - if you have two with identical limits, but you've had one - with a good payment history - for 15 yrs and you've had the other - with similar payment history - for only

1 year - closing the newer one will have less impact. How much less, nobody who knows is permitted to tell. But that there is a difference is well publicized by FI.)

The bottom line, though, is that the *big* events are the ones worth worrying about - make damned sure you pay your bills on time, that you don't exceed your credit limits, etc.

Agonizing over whether some small thing is going to knock your scores around by a few points, however, is effort and energy which could be used far more productively.

Pay your bills on time, don't overextend, and stop worrying about your credit score - unless your score really stinks *and* you need to borrow money soon - in which case, chances are that your problems are the big things, not the little ones and your credit score is probably not your biggest concern.

"Bill Woessner" wrote

It depends on what you mean by "details." Numerous, reputable, consumer-oriented sites give approximate percentage breakdowns of the credit score like those appearing at

. The company that owns the FICO formula itself provides this information at no charge via

Once again, you are a valued source of information. I'd not seen this brochure before now.

This leaves me more curious as to how the financial institutions (e.g. lenders, insurance providers, employers) treat these numbers. If 750+ is treated as prime, and points within that range make no difference, then

40% of people have nothing to be concerned about, except, perhaps dropping out of that level. If FICO is looked at closely so that every 20 points makes a real difference, that would surprise me. Suze Orman refers to FICO constantly as if it were an SAT score, 600, a state school, 750, IVY league. And yet, my experience mirrors John's, it never seemed to be an issue. When I was in over my head with rental property, the next bank said I had too much available credit, a condition of the loan was to bring in the excess cards, with letters authorizing cancellation. I brought that in, and walked away with a mortgage commitment. I have one card with my wife that we use regularly. Pay in full every month. I now understand that if I wish to bump my FICO score a few points, I should pay the bill before the invoice is cut, i.e. have the bill itself always reflect zero or close to it. Or I can wait for the bill and take the extra couple week's float. Whatever. Since I am not in the market for any new mortgage, and even if I were, I'd think the credit report would tell me enough. JOE

Mine had a 50 point difference between 2 companies. Keep in mind that not all lenders report to all 3 agencies. Thumper

I'm even doubtful of that. That assumes that the response to these events are monotonic through the entire parameter space. Even conventional wisdom says this isn't the case. You have to have open lines of credit, but not too many. You have to USE your open lines of credit, but not too much. See where I'm going with this?

In fact, there are even contradictions in the conventional wisdom. Consider this exceprt from the Wikipedia page on the credit score:

"Length of credit history" is also a murky concept; it consists of multiple factors -- two being the oldest account open and the average length of time an account has been open.

Let's apply that statement to the OP's original question. The OP has a credit card that's less than one year old. What effect will closing it have on his credit score? According to the statement above (and assuming he has an account older than the credit card in question), his score should go UP. The oldest account open is unaffected and the average age of accounts will go up. Yet the consensus here, which I believe to be correct, is that his credit score will go down.

So I stand by my original statement. The FICO algorithm is very complex. The parameter space is enormous and I doubt the function is monotonic in ANY of the variables. Claiming to have reverse engineered the FICO algorithm to any degree of accuracy is sort of like cold fusion. It may sound good; people may even buy in to it. But until I see a more rigorous analysis (or I land a job at Fair Isaac), I will continue to view the FICO algorithm as a black box.

--Bill

"Bill Woessner" wrote

Just my opinion, but I think the problem is you are insisting that evaluating a person's credit riskworthiness is an exact science. The myfico.com site sheds some light on why it is not. IMO, it's common sense. Any useful credit algorithm has to rely on assumptions. E.g. it could assume credit from one company is the same as any other. But realistically, is this wise, supported by statistics about credit reliability, etc.?

The FICO score's authors, from my reading, among other things indicate that credit from one company may be treated differently from another. Now of course this means some subjectivity is applied when, say, a person shuts down credit from Lender X as oppposed to shutting it down from Lender Y. Then there's the question of quantifying how much the difference should be! See how non-black-and-white this is?

ISTM this is why it is said (IIRC by FICO authors and lenders alike) that being in a certain range is what determines whether one gets a certain loan, and that a 720 will frequently be read as no different from a 760.

It's not a perfect system, and it's some times annoyingly expensive, but I can see that there is a need for such a system. I have yet to read of a better one for evaluating a person's risk and ensuring the freeing up of capital to build business, homes, etc. and so improve the general human condition.

No, I don't think it's an exact science. But that's neither here nor there. The important thing is that the FICO score IS exact (at least... I HOPE it is; it would be really creepy if the algorithm were nondeterministic). You give it a bunch of inputs and it spits out an output. It's a function, plain and simple. It may not be analytic, it may not be smooth, it may not even be continuous, but it is a function. I believe, without any direct evidence, that it's a very complicated function and, as such, it's extremely difficult to reverse engineer to any degree of accuracy.

Just take a moment to think about how complicated it would be to try and reverse engineer the FICO function. Do we know all the inputs? Do we even know how many inputs there are? How many points within the parameter space are we allowed to sample? To develop even a slightly nonlinear approximation to the function, we need twice as many samples as there are inputs. How many inputs are there, again?

I'm not saying it's impossible. I'm not even saying it hasn't been done. But this is the sort of analysis I do every day and I know what it takes to get it right. Until I see some sort of rigorous treatment of the problem, I will continue to take conventional wisdom regarding FICO scores with a grain of salt.

--Bill

"Bill Woessner" wrote

To /any/ degree of accuracy? We disagree. I will continue to advocate to that which myfico.com, many reputable web sites, as well as countless souls testify. Namely and generally speaking, focusing in proportion to improve on the five FICO categories will improve one's credit scores.

I think it's important to remember that FICO operates at no small risk to liability, since Congress inter alia would nail it if it was capricious in assigning credit scores, which are so critical to people's fortunes.

System identification (the correct term to use in place of "reverse engineer") is the sort of analysis I did for several years. Unfortunately those who focus strictly on the numbers without considering the value of the input itself can be distracted from the purpose of the system (function) in the first place. Approximations, without nailing the function precisely, are perfectly useful. This is particularly so when, as you should know, the output of a model (= the algorithm) is only as good as the input. The input rests on assumptions, so the ostensibly rigorous output is subject to some interpretation. Thus the caveats from FICO's authors and others, about granting the score some leeway, are entirely appropriate. At the same time, the big picture a FICO score provides remains the most reliable we have at present.

Besides, we'd sure hear about it if someone did clearly follow the general FICO guides for improving his/her credit score and it failed to improve. We simply do not hear such stories.