Interest Rates/Refinance

[dmccarty]

Dan,
I was not trying to be critical, I guess "obvious" was not the right word. I was trying to say I'm pretty sure I knew the reason why.

I did not mean to sound critical so no foul on your part and hopefully none I mine.

Just what they I have read on the subject is mutually exclusive. I was talking with a coworker today about this and she told me that canceling unused credit cards was bad thing for one's score. Where have I heard that before.

Its as clear as mud....

Later,
Dan

 

[2manyrocks]

Yes--clear as mud, but at least mud can be washed off unlike a credit score. Part of the problem here is that there are three major players who score credit, and each has their own "model" by which they crunch numbers. And lenders have a certain conflict of interest in having customers in the dark about this because the customers with the higher scores can get better rates and pay less interest. So lenders don't have much incentive in helping you to improve your score.

One thing you might do is Google credit scores and start reading. I'm sure there is much more to be learned.

Here is a link to an article on canceling cards--they appear to recommend that you leave the cards open--but cut them up if you're tempted to abuse them. Cancel a card, hurt your credit score (Page 1 of 3)

 

[Bird]

I called to cancel a credit card this past year simply because it had only been used once in the past 5 years and that was just to see it would be accepted (it was). But the first person transferred me to another lady who did everything she could think of to try to get me to not close the account. In fact, I had to show a bit of anger to ever get her to agree to close the account. It's a weird business.

 

[JB4310]

I called to cancel a credit card this past year simply because it had only been used once in the past 5 years and that was just to see it would be accepted (it was). But the first person transferred me to another lady who did everything she could think of to try to get me to not close the account. In fact, I had to show a bit of anger to ever get her to agree to close the account. It's a weird business.

Yup same here, I wanted to cancel my American express gold card 5 or so years ago, remember that was supposed to be some kind of a status symbol! At that time they were charging a yearly fee, well I wasn't using it much, didn't like their terms, they would never tell you what your limit was unless you went over, didn't want to pay for it anymore.

They made me jump thru some hoops and talk to supervisors and in the end offered it to me for no charge, it was like they would not take no for an answer, so I kept it another year and cancelled it after that.

Judging by that article linked to by 2manyrocks I guess I didn't know what I thought I knowed about having a few open charge cards and how that might impact a credit score.

I had to many at one time, like a desk drawer full! and noticed if you didn't use them for a long time they stop sending them, don't know how that affects your credit, only carry 1 visa and 1 MasterCard now.

 

[Bird]

Yup same here, I wanted to cancel my American express gold card 5 or so years ago, remember that was supposed to be some kind of a status symbol! At that time they were charging a yearly fee, well I wasn't using it much, didn't like their terms, they would never tell you what your limit was unless you went over, didn't want to pay for it anymore.

They made me jump thru some hoops and talk to supervisors and in the end offered it to me for no charge, it was like they would not take no for an answer, so I kept it another year and cancelled it after that.

Judging by that article linked to by 2manyrocks I guess I didn't know what I thought I knowed about having a few open charge cards and how that might impact a credit score.

I had to many at one time, like a desk drawer full! and noticed if you didn't use them for a long time they stop sending them, don't know how that affects your credit, only carry 1 visa and 1 MasterCard now.

I've never had (or maybe I should say "used") very many credit cards. My first was a Mobil card, then I was sent a Phillips 66 card that I didn't ask for, I was also sent a Montgomery Ward card that I did not request, and an unrequested card came from another department store in Dallas. I did request (and use) a J.C. Penney's card for several years before cancelling that account in 1977. I got a BankAmericard from my local suburban bank nearly 40 years ago. That card was later transferred to a bigger bank in Dallas, then eventually changed to Citibank and became a Visa card. In 1988, they sent me a sales pitch for a Visa Gold (as you said, an annual fee) with all kinds of great features (according to them), and I was intending to soon becomne a full time RVer and travel a lot, so I agreed. Like a dummy, I assumed it would be converting the card I had to a gold card. Nope, it was an additional account, so I cancelled the old Visa card.

I used that gold card a great deal, but after 2 years, I called and told them I just couldn't justify paying them an annual fee for the privilege of giving them over a thousand dollars worth of business a month. The guy said he couldn't issue a credit for that fee, but he could send me some coupons for that amount (and they were coupons I would actually use) so I agreed. The next year, they dropped the annual fee ($50).

When Discover Card offered their "no fee" and "cash back" deal, I started using a Discover Card and only used the Visa if a place did not take Discover, and I still do that.

But for reasons unknown, Citibank changed my Visa Gold to a Platinum MasterCard. So I have a Visa card from another bank and use it when a place does not take Discover.

So, the first time I called to cancel that Citibank card, after not using it for a couple of years, the guy told me I shouldn't do that because I had a bunch of "points" I'd never heard of, but anyway I got a free $50 gift card for Home Depot. A couple of years later, I called to cancel it and was told that I had a $20 credit on the card (no idea what that was for since the card had not been used and they couldn't tell me where the credit came from), so I used the card once to use up the free credit. But this past year, they only tried to talk me into keeping it instead of paying me to keep it.

 

[BungeeII]

There is a magic number there. I hit 840 on a score before, but am now in the sevens.

They want to see:
Secured accounts; (home, car)
Reasonable limits unsecured accounts (credit cards)
Activity on the unsecured accounts, but with low balances (i.e. paid off every month)

Getting too high of a limit on credit cards or lines, even if unused, will cause your score to suffer.

To get things back on topic here....
I just spoke with a local bank that was writing mortgages at 4.5% earlier this week, but are now at 4.75%. I'm giving mine a go again with bank, with the hope that different appraiser will have more favorable comps to pull. Worst case scenario is that I have 2 appraisals to submit to the township for a reduction of my "taxable value".

 

[Chuck52]

Just hanging onto a card you don't use can be dangerous, too. I quit using a card, but never called to cancel it. After a while I quit getting any mailings from the company, until about five years after I tore up the physical card some guy in Florida used that account to get the maximum cash withdrawal, about 5K as I recall. The card company called me up, but they didn't hassle me about it at all, accepted my word that I didn't use the card, and told me the account would be closed. I've had one active card account scammed, too, and again it didn't cost me anything.....at least not directly. We all pay for the money the card companies lose to scams, one way or another.

Chuck

 

[ultrarunner]

I called to cancel a credit card this past year simply because it had only been used once in the past 5 years and that was just to see it would be accepted (it was). But the first person transferred me to another lady who did everything she could think of to try to get me to not close the account. In fact, I had to show a bit of anger to ever get her to agree to close the account. It's a weird business.

Yes it is... the best way to get credit is to prove you don't need or want it.

I grew up in and around the car business and lenders would just about bend over backwards in an effort to get someone paying cash to take out a loan...

This was back in the 70's and 80's when loans were a bit harder to get.

 

[Bird]

Yes it is... the best way to get credit is to prove you don't need or want it.

You know now you can get one free credit report from each of the 3 reporting companies once a year, so about every 4 to 6 months, I get one, then next time go to another of the companies. In other words, I spread them out. But I usually go ahead and pay for their credit score, too, out of curiosity. And while they may be close, the different companies come up with different scores and the score can change frequently, I guess. And now they've even got a new scoring system. Three years ago, when I was about to buy this house, I checked and found one company scored me at 911 and another at 913 (pretty close). Then in December, 2007, one scored me at 905 (that was before I cancelled the old Citibank card) while in December 2008, it had been lowered to 868 (now that was a different company and I had not opened any new accounts or gone it debt at all). Of course those scores were based on the old system of 501 to 990. With a different company in August 2008, and the new system of 300 to 850, my score was 788. How can any lender use those numbers? And my credit report shows that American Express regularly and frequently checks my credit report, and they regularly and frequently send me junk mail saying that I'm pre-approved for an American Express card. I've never had an American Express card and have no use for one, but they don't give up easily. I've even put all their stuff in their postage paid envelope and sent it back telling them I'm not interested and that they can quit sending that stuff, but even that hasn't stopped them. And the same is true of Capital One.

 

[mjarrels]

I got junk mail today from bank of america trying to get me to borrow money... I think BOA is about to go under! When you own two houses free and clean, the offers never end for home equity loans!

mark