Author Topic: cancel credit card or decrease credit limit or do nothing  (Read 598 times)

kenaces

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cancel credit card or decrease credit limit or do nothing
« on: January 11, 2018, 04:27:22 PM »
I have been a cash only guy for many years so only had Amazon CC card that I don't think I have ever used($500 credit limit).  A few weeks ago I was in line at my bank and got a CC that gave me $200 bonus for spending $500 plus additional 1-3% on purchases.  The teller just asked a few questions and then came back with CC with 10K limit.  I already received the $200 bonus, and I think I would like to get travel rewards card.  My credit was 720 about a month ago and only debt I have is auto loan.

So, before I apply for another rewards card should I decrease the limits on the TD card?  Cancel it? or Do nothing?

Any good reads you guys can recommend so I can get a handle on how to maximize the rewards cards, and still keep decent credit rating?

iowajes

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #1 on: January 11, 2018, 04:30:16 PM »
Length of credit history and percent of available credit used are part of your score. Do nothing.

Source: have a shit ton of credit cards and an 820-840 score.

Bracken_Joy

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #2 on: January 11, 2018, 04:33:58 PM »
If it has a yearly fee, cancel it right before the fee hits next year. Set a reminder. Otherwise, leave it.

Only time it's worth decreasing limits is if you want a new card with a company that you've reached your cap with- even then, they usually just automatically move it is my understanding (like with american express).
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iowajes

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #3 on: January 11, 2018, 04:40:51 PM »
Before canceling a card with an annual fee, first ask if they will waive it. Mine nearly always do.

Syonyk

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #4 on: January 11, 2018, 05:48:08 PM »
Yeah, no reason to cancel cards.

Be aware that many will auto cancel for lack of use. A charge a year should cover it.
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kenaces

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #5 on: January 12, 2018, 09:09:06 AM »
Thanks

So is there any reason I shouldn't call the Bank cc and ask them to lower my line of credit from 10K to 1K?

Sure seems like total credit available should impact my score on some level?

Syonyk

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #6 on: January 12, 2018, 09:17:42 AM »
"Percentage of used credit" is a major metric in credit score.  Using $500 of a $10k limit is a far lower percent than $500 of a $1000 limit, and the second will definitely impact your credit score.

I've enjoyed watching my credit score bounce with literally nothing but percentage utilization changes (when I was helping kickstart a business as a line of credit for hardware).
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Bracken_Joy

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #7 on: January 12, 2018, 09:36:58 AM »
Thanks

So is there any reason I shouldn't call the Bank cc and ask them to lower my line of credit from 10K to 1K?

Sure seems like total credit available should impact my score on some level?

You WANT more credit. Then your utilization is lower. So long as you won't go insane and fill up with debt to your credit availability, then there is no harm, just benefit, to having more available credit.
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iowajes

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #8 on: January 12, 2018, 10:02:27 AM »
So people have told you the reason to NOT lower your credit limit.

Could you share what reason you could possibly have TO lower it? I can't follow the line of thinking of wanting to ask for a lower limit.

Lis

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #9 on: January 12, 2018, 02:15:04 PM »
Credit card companies give you a higher limit to tempt you to spend more. Given that you're on this site, you're probably not the type of person to randomly run out and make a $10k purchase without thinking. Unless you're the type of person who needlessly spends and wants/needs a credit limit to force them not to, there's no real reason to lower your credit limit. The benefits listed above outweigh the (really non-existent) negatives.

Ann

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #10 on: January 12, 2018, 03:05:30 PM »
. . . still keep decent credit rating?
Agree with all the others.  It may not necessarily seem intuitive what is "good" or "bad" for a credit score.  For example, I just checked mine and, while I have no need to worry about my score, the areas I could "improve" are

*"Lack of recent installment loan payments
Your credit report shows no recent non-mortgage loans (such as auto or student loans) or sufficient recent information about your loans. Having a loan along with other types of credit demonstrates that you are able to manage a variety of credit types."

*"Too few accounts currently paid as agreed:
Your FICOŽ Score considers the number of accounts where you are paying your bills as agreed. In your case this number is too low because you have very few accounts or because you've missed payments recently on some of your accounts." [I didn't miss payments.  I have "too few" accounts]

Cancelling an old, established credit card (credit history counts!) or reducing your credit limit will negatively affect your credit score.

I don't feel as though one should live their life trying to maintain the highest credit score possible.  Beyond a certain level it doesn't matter -- I doubt there are loans/rate difference between 800 nd 815 and 849.  I'm not going to open more accounts or take out a car loan to "help my score".  But I have kept my oldest credit card, even though it has no rewards, just for the credit score boost.  I suggest a quick Google to find out the ways credit scores are accessed.  Don't be a slave to it, but no need to metaphorically shoot yourself in the foot. 

Spartans

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #11 on: January 12, 2018, 03:14:04 PM »
So people have told you the reason to NOT lower your credit limit.

Could you share what reason you could possibly have TO lower it? I can't follow the line of thinking of wanting to ask for a lower limit.

Auto approvals.  If you have too high of credit limit from a bank in relation to your income they could deny you.  Ofcourse you could always call recon and ask them to move around some of your CL from one card to the new card to get approved.  For Chase I've heard you want your total Chase CL to be around 10K less than 50% of your income.  So if you have 100K income you want total Chase CL around 40K or lower before applying for another card.

In general though, you want low utilization (under 25%) so a higher CL helps with that.
« Last Edit: January 12, 2018, 03:16:14 PM by Spartans »
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iowajes

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #12 on: January 12, 2018, 03:35:39 PM »
Thanks Spartans.  I've never really given a thought to my score or what cards I take out, and Ive never had an auto loan.

kenaces

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #13 on: January 12, 2018, 10:46:46 PM »
Thanks

So is there any reason I shouldn't call the Bank cc and ask them to lower my line of credit from 10K to 1K?

Sure seems like total credit available should impact my score on some level?

You WANT more credit. Then your utilization is lower. So long as you won't go insane and fill up with debt to your credit availability, then there is no harm, just benefit, to having more available credit.

Well my plan is to just get new travel rewards card and never use the TDbank card again, so zero balance on 1k or 10k limit - does it matter?

Also not sure if my low income relates or not to any of this?
« Last Edit: January 12, 2018, 10:51:42 PM by kenaces »

kenaces

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #14 on: January 12, 2018, 10:49:42 PM »
So people have told you the reason to NOT lower your credit limit.

Could you share what reason you could possibly have TO lower it? I can't follow the line of thinking of wanting to ask for a lower limit.

No one told me anything - I am asking you guys because I don't know much about CC and rating as I haven't really used them for many years.

I guess I was thinking of lowering TD card since 1)I don't need it 2) I was planning on working my way through some other reward cards and figured that if I keep opening 10K limit cards I will have too much credit for my low income - therefore hurting my credit score????

kenaces

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #15 on: January 12, 2018, 10:55:16 PM »
So people have told you the reason to NOT lower your credit limit.

Could you share what reason you could possibly have TO lower it? I can't follow the line of thinking of wanting to ask for a lower limit.

Auto approvals.  If you have too high of credit limit from a bank in relation to your income they could deny you.  Ofcourse you could always call recon and ask them to move around some of your CL from one card to the new card to get approved.  For Chase I've heard you want your total Chase CL to be around 10K less than 50% of your income.  So if you have 100K income you want total Chase CL around 40K or lower before applying for another card.

In general though, you want low utilization (under 25%) so a higher CL helps with that.

This is what I was concerned about - having 10.5k lines of CC open on low income(~20K). 

I don't carry or plan to carry any balances on CCs so is the "utilization" based on CC spending per month? year?

iowajes

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #16 on: January 13, 2018, 01:09:41 AM »
My understanding is utilization is based on when they pull the report.

Bracken_Joy

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Re: cancel credit card or decrease credit limit or do nothing
« Reply #17 on: January 13, 2018, 08:02:15 AM »
So people have told you the reason to NOT lower your credit limit.

Could you share what reason you could possibly have TO lower it? I can't follow the line of thinking of wanting to ask for a lower limit.

Auto approvals.  If you have too high of credit limit from a bank in relation to your income they could deny you.  Ofcourse you could always call recon and ask them to move around some of your CL from one card to the new card to get approved.  For Chase I've heard you want your total Chase CL to be around 10K less than 50% of your income.  So if you have 100K income you want total Chase CL around 40K or lower before applying for another card.

In general though, you want low utilization (under 25%) so a higher CL helps with that.

I've never heard of the auto approvals part, but I'll give a link of utilization to see if that helps: https://www.nerdwallet.com/blog/finance/credit-utilization-improving-winning/
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