Comments on: It’s OK to close expensive credit cards http://blogs.reuters.com/felix-salmon/2010/03/11/its-ok-to-close-expensive-credit-cards/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Sandrew http://blogs.reuters.com/felix-salmon/2010/03/11/its-ok-to-close-expensive-credit-cards/comment-page-1/#comment-12637 Thu, 11 Mar 2010 20:33:54 +0000 http://blogs.reuters.com/felix-salmon/?p=2934#comment-12637 Is FICO a measure of expected creditworthiness or of expected profitability (fee & interest income net of credit losses, ceteris paribus) of an individual borrower?

If the former, dropping one line of credit for a cheaper one ought not have any impact on your score. If the latter, expect a lower score. Said differently, if we find out that switching negatively impacts your score, that gives us insight into the true meaning of the score (which may differ from what the scorekeepers tell the public).

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By: wcw http://blogs.reuters.com/felix-salmon/2010/03/11/its-ok-to-close-expensive-credit-cards/comment-page-1/#comment-12632 Thu, 11 Mar 2010 19:51:47 +0000 http://blogs.reuters.com/felix-salmon/?p=2934#comment-12632 The issue isn’t utilization, but average age of open credit lines. If your newly expensive Citi card is your oldest open card, against say two newish rewards cards, then closing it can make you look like a green credit to Fair Isaac’s models.

Full disclosure: this is a particular hobbyhorse of mine. My credit union sold its card portfolio to a US Bank subsidiary. Said subsidiary reports the transfer date as an open date to the CRAs. This was my only open credit card. The result for me was an immediate 100-point drop in FICO.

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