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Old 02-27-2016, 04:39 PM   #41
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Originally Posted by TripletDaddy View Post
I don't have a bunch of credit cards. I have never been huge on amassing loads of cards....In fact, I only have 3.....and one of them isnt in my name, as it is provided by the firm for T&E, so it doesnt even show on my credit report. We don't do department store cards, either.

Focusing on my 2 "real" credit cards......

1. My credit score is fine. It isnt over 800 like some, but still just fine (above 700). I'd like to keep it that way.
2. I have had both credit cards for about 8 years now.
3. I know that closing an old account can actually hurt your credit score

Here is where I need the guidance. One of the cards has an annual fee attached to it as part of a rewards program (airline miles). However, I almost never use the card and don't really care about the miles rewards. It is a waste to pay the annual fee, but I dont want to cancel.

Assume that the credit card company offers a no-fee credit card, sans rewards program. If I switch from my current card to the new, no fee version, does that constitute "closing" my account and will it ding my FICO score?

I called the company to ask but the customer service rep said that they do not comment on credit scores. I guess I could call one of the Big 3 and ask how they calculate, but does anyone here have experience with this?
The reason closing an account lowers your score is because it shrinks your total credit line (of all your accounts). The most heavily weight component of your fico score is credit utilization rate, which is your total credit balance divided by total credit line. The lower it is, the better your score.

So closing an account will decrease the number on the denominator of your credit utilization rate, making the rate higher and negatively impacting your score.

To ameliorate the situation, just open another account.
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