6 Ways Your Credit Score Changes Thursday

A new system for determining your credit-worthiness, FICO ’08, rolls out this Thursday, and there’s nothing you can to do stop it. By these 6 changes, ye shall be judged:

1. Spouses and children can improve their credit score by being an authorized user on a credit card account, but that’s it. No more piggybacking off strangers.
2. Debts less than $100 that go to collections will matter less.
3. They will look at the total picture more. A single repossession, for instance, won’t matter as much if everything else looks good.
4. Having less available credit will drag down your score more.
5. Diversity matters more. A mix of healthy auto, personal and student loans would bring up a score.
6. Closing accounts will bring down the score.

Though companies will start using it to make decisions about you right away, it may be months or even years before the scores are commercially available to consumers. So, just like in middle school, they’re quietly judging you behind your back, and no, you can’t see inside the black and white composition notebook.

The good and the bad of the new credit scoring formula [NewsChannel5]


Edit Your Comment

  1. Roy Hobbs says:

    Here’s my question –

    I’ve got a Costco Amex card with a $10k limit that I normally charge about 3-4k/month on for business expenses. It is paid off in full every month and has a fantastic cash back program (I’m getting a check for about $700 this month in rebates).

    I’ve got a Visa card that has a $43k limit that I put between $500-700 a month on, and pay off in full every month.

    Does FICO look at each card individually with respect to credit utilization, or does it combine all the credit limits and balances and then figure out the utilization?

    • XTC46 says:

      @Roy Hobbs: ITs a total I believe. This is why when closing out old/unused cards its important to look at how it affects your total line of credit. IE, you have 3 cards for 10 k a piece, say all have 4 k on them, thats 12k/30 k total, you consolidate to 2 cards, close the third, you now have 14k/20k which is much worse.

    • hoffmeister_hoff says:

      @Roy Hobbs:

      It looks at the aggregate

      Total Credit Limit = 53K
      Total Credit in use = 3500-4700
      Total utilization = 7-9%

      Which is considered excellent

      • Inglix_the_Mad says:


        Wow, my wife and I going to look golden at that point.

        We each have around 90k in available credit on individual cards plus the joint with is 75k, but we only charge about 6k total per month personal (and it’s paid off every month). My business card won’t be so nice. 50k limit (I might get that upped, but I didn’t need to worry about it before), and about 15k-25k in expenses monthly. Ouch. Or is this new system just for individuals?

        Does available savings / checking balance affect this? We do keep quite a bit of dosh in the savings accounts each and a bit in the checking (to deter fraud the savings and checking are NOT linked) at 2 banks / 2 credit unions. My business account has a larger floating balance (positive) as well.

        • Necoras says:

          @Inglix_the_Mad: Neither cash nor dosh have any effect on your credit score. It’s a *credit* score. Investment accounts (401K, other stocks) don’t show up either, but if you’re taking out a large loan (house usually) they’ll ask about it.

    • lightaugust says:

      @Roy Hobbs: I’ve had many questions on use of the Costco Amex card as well… I put EVERYTHING on it and pay it off every night, roughly in order to game that rebate… credit wise, does this matter at all? Good idea, bad idea?

    • moracity says:

      @Roy Hobbs:

      I do believe that debt ratios on individual lines of credit do have and effect. If you have a card with a 3000 limit and have 1000 balance, but have a 20k card with no balance, you will get dinged for a high ratio on that card. The calculation always works against you.

      If you never carry a balance, it’ll have little effect – good or bad – on your credit score. It will look like you never use the credit. Banks also don’t like it when you don’t carry a balance either. Like others, I use a CC for all purchase, then pay it off each month. However, at least once a quarter, I carry a small balance. Every six months I apply for a credit increase. Using this method, I have 3 or 4 cards with limits around 30k. The fastest way to increase limits is to carry a balance. Of course, if you are not a disciplined person, having that much available credit is bad. In the mid-90’s my credit was in the toilet – in the 400s. Last month it was 804. Although, it’s been in the 700s for a few years prior to that. It takes time for bad stuff to fall off.

      Having a good FICO pays off in many ways. You’d be surprised how many things are tied to it nowadays.

  2. Design3r says:

    Looks like I might have to keep my Capital One card after I pay it off this month after all… :(

    • econobiker says:

      @Design3r: Or over pay by a couple of dollars to keep it open and have them send you a check back.

      Some folks are getting their cards cancelled for non-use…

  3. JulesWinnfield says:

    Cn’t nybdy spll jdgmnt crrctly???

  4. Marco A. Diaz says:

    I used to pay off all my credit cards and then close them because they represented evil, WTF!!!!!!! There goes my score…

    • TexasMama37 says:

      @Marco A. Diaz: But if you have closed them then you aren’t using credit, right? So who cares what your credit score is. I suppose it might affect something like your car insurance rates but I would think that a logical insurance agent would be able to look at the big picture instead of a single score. I like Dave Ramsey’s definition of the FICO score — it’s an “I love debt” score.

      • parkavery says:

        @TexasMama37: I’m guessing Marco might want a mortgage or a car loan at some point…

      • anonairman says:


        Agreed. I wish more people would start living within thier means, budgeting, and taking care of themselves. People complain about the government taking out almost a $1 Trillion loan to do the stimulous thing… does it really surprise you, even if people deny it, since the government is just an extension of us?
        Personally, I say leave it alone… the economy is just slowed down because people stopped buying things on “credit” as much… because they started realizing (or having it realized for them) that they can’t afford the payments. So they had to start budgeting and living within thier means.

    • MisteriosaNYC says:

      @Marco A. Diaz:

      closing up your old cards after you pay them off damages you FICO score. when determining the Fair Isaac score, the longer you credit history, the better. also youre reducing the amount of available credit you have. you make the debt to credit ratio smaller (which makes the fico smaller). you can cut up the card, so you wont use it, but you dont want to destroy that part of your credit history (esp if you had the card for a long time)

    • seishino says:

      @Marco A. Diaz: I second this viewpoint. Being financially responsible generally means having little or no debt, keeping spending within means, and building up a solid savings.

      I was responsible, saved my earnings, and paid for my car in cash. *cash*. Because of this, my Fico is embryonic, and my future ability to borrow for a condo is impaired.

      This system doesn’t quite seem fleshed out enough to really show the default risk that people may represent.

      • HogwartsAlum says:


        Yes, and this confuses me. I know the card companies are in the business of making money, and they don’t make money off you if you don’t borrow, but it seems like it’s too focused on whether people have cards and pay them off vs. if they are responsible like you are.

        They make it so you can’t rent a car, book a hotel room, etc. if you don’t have a card, which encourages debt, which makes people get in trouble, which means they can’t pay for their stuff, blah blah blah. It’s like a reward for being irresponsible.

        • anonairman says:

          I think it’s more based off of whether they will make more money off you because they know you’ll use the cards if they send them. It’s a chain… they give you lower rates since you were good and spent lots of money and paid them lots of interest…. so you spend MORE money and pay them MORE interest.
          If you pay stuff off well (ahead of schedule) they make less money on you for interest… Bad!
          If you default on your debts and they don’t get paid… Bad!
          Of course they will lump you both together. The score is based on if they will make money off you. Simple, direct, and the only thing that will matter to a buisness–since it’s thier job to make thier shareholders money.

    • SacraBos says:

      @Marco A. Diaz: I was at a Dave Ramsey event this weekend, and he thinks you shouldn’t care about your FICO score. He doesn’t have one, since he has no recent debt history. He calls it your “I Love Debt Score”, since it doesn’t measure your financial well-being, but how much debt you have, etc.

  5. Munchie says:

    I was happy with the old system, mostly because I am a cash is king kind of guy. Now because I choose not to have a credit card will have a bigger effect. Guess its time to get one so I have the super power of charge back if necessary.

    • Corporate-Shill says:


      They forgot to mention the effect of chargebacks on your credit. Your CC provider factors in the number of chargebacks you attempt (as well the size and types of merchants)as part of your credit worthiness formula.

      Repeated chargeback requests for $10,000 at Linda’s Ladies of the Night will place you into a certain high consumer credit risk category from which you may never depart.

    • TouchMyMonkey says:

      @Munchie: I guess cash is a sort of a UK style constitutional monarch now.

    • Anonymous says:

      @Munchie: Well it is a “credit” score not a cash score. So rest assured your cash ccore will remain unaffected.

  6. Canino says:

    4. Having less available credit will drag down your score more.

    6. Closing accounts will bring down the score.

    So, that’s a no-win situation it seems…

    • Charles Lam says:


      Or you could, y’know, just not use the cards.

      • ZukeZuke says:

        @Charles Lam: Tell me again what the advantage is of having multiple cards with high rates that you don’t use? I mean, other than the possibility of identity theft and needlessly complicating your finances and the # of accounts you need to keep tabs on?

    • sven.kirk says:

      @Canino: ‘Having less available credit’ is meaning using over a certain percentage, usually 1/3, of credit on a particular card.

      • bwcbwc says:

        @sven.kirk: That’s the old formula. Not clear what the new value will be.

        @Charles Lam: Having an unused account around is an identity-theft risk, unless you check online every month or so to make sure no one has rung up charges on the account and submitted an address change.

    • Posthaus says:


      That part never made sense to me either. It makes even less sense to me now in light of our economic fallout…

    • QuantumRiff says:

      @Canino: That really sucks if your one of the people that had the bank lower their credit limit for no reason. Also if your one of the people that had cards from two banks that merged, ie, a WAMU and a chase card. They’re not going to change to one card with the combined limit.

  7. Brittany Stewart says:

    Okay, so I have two credit cards. I have a Victoria’s Secret card ($500 limit and no balance) and a Visa ($900 limit, 700 balance- I know, but I’m paying it off slowly!) My credit scores aren’t great, really, but they’re not bad. 702 from everyone but experian, who gave me 655.

    I applied for and received a student loan for this semester. So, is all of this going to raise my number or lower it? I need a little clarification.

    • Traveshamockery says:

      @Brittany Stewart: Nobody can tell you for sure. My guess (again, purely a guess) is that your score will probably go down because you have a high debt ratio (50% of your $1400 total credit lines), and $1400 is a pretty low overall total available credit number.

      The only way to know for sure is to check your scores (your actual FICO score, not the FAKOs that some people push) after the change.

    • Traveshamockery says:

      @Brittany Stewart: I’ll add that under this new system, you should keep your old credit card accounts open forever…even if you quit using them, just cut the cards up and keep the accounts open to avoid a significant credit hit.

      Since you’re in college, you probably don’t have a lot of credit history, so if you’re responsible the next few years, you’ll see strong increases in your score just as your credit history gets longer.

      • TouchMyMonkey says:

        @InfiniTrent: I never understood the significance of having a big stack of unused plastic with credit limits high enough to really get into trouble. Isn’t having enough available credit to push one into bankruptcy if it were ever maxed out, uh, you know, a BAD thing? Last time I talked to a mortgage broker, she told us something to this effect.

        • uncle moe says:

          @HurtsSoGood: that’s part of the point, if you have the credit but don’t use it, it shows restraint and responsibility…thus a higher score from more available credit

          • Anonymous says:

            @kid_moe: Sounds to me like a way for credit card companies to keep collecting a yearly “account maintenance fee” or whatever they are deciding to call it these days. I called my company and asked them to waive the annual fee on a card I never used, and they said no because I never use it. I canceled the card and my score went down. Bastards…

    • BlondeGrlz says:

      @Brittany Stewart: Before we got married, my husband had absolutely no credit cards but had gotten several car/personal loans from his bank. Since those loans were paid ON TIME EVERY MONTH without fail he had a pretty good credit score despite a few missed utility/cell phone payments. If you’re deferring payment until after you finish school the loan will probably bring your score down, since your total debt will increase significantly, but in the long run a consistent payment history is a good thing.

    • Brittany Stewart says:

      @Brittany Stewart:

      Okay, so if I pay off my card more (like I intended when I got my loan money) my score will go up. This is good. However, because I don’t have a really steady job I have to defer payments on my loan until I get out of school, which will be December of 2010.

      It looks like my credit won’t be great for a while, but at least I’m on the right track with making payments on time. Thanks everyone.

      • Traveshamockery says:

        @Brittany Stewart: Brittany, when I came out of school, I had about $21k in loans, and they were all deferred. Even then, my credit score was in the 710-720 range. Debt you’re not late on, even if it’s deferred, really doesn’t hurt your score much. Miss one payment, and brace for impact though!

    • Anonymous says:

      You need to get your cards under a 30% balance to maximize the positive points on those cards. Once you start maxing out card you lose points. Also, opening a new account will hurt you at first but over time it will help you.

  8. henrygates says:

    I don’t like the “diversity” bit. Someone who has a healthy financial portfolio probably won’t have a student loan, and a car loan, and credit cards, and personal loans, and a mortgage. They might have a mortgage and some credit cards they pay off every month, but not a slew of various debts.

    • im.thatoneguy says:


      I payed off my student loans in less than 12 months.

      I would think that should tell a lender. “Wow this guy is really good at repaying debt.”

      It should address your history. “He’s had a car loan and payed it off in the past, He’s had a mortage and payed it off in the past, He’s had a Student loan and payed it off in the past.”

      • ritarocksnosalt says:

        I have an excellent financial portfolio and have a mortgage, a car payment (for a few more months), an excellent history with my credit cards- and still a very substantial student loan debt.

        This is strikingly similar to most of my friends who went to medical school.

        That said, I realize that we’re not the norm. And I do agree with the “paid it off, or is paying down very reliably” criteria.

      • XTC46 says:

        @im.thatoneguy: That is how they look at it. It is a credit history, not just a snapshot of your current financial status. Paying off loans shos up on a report just like not paying it off does.

        • bwcbwc says:

          @xtc46: Well it shows up in the credit report, but it’s not clear how current accounts vs. paid-off accounts will balance in the new credit SCORE formula.

      • teh says:


        I would think that should tell a lender. “Wow this guy is really good at repaying debt.”

        From the lenders perspective, this does indeed mean that you are good at paying off your debt, but that they will not make nearly as much in interest off you. Ideally, you’d pay according to your minimum monthly/quarterly schedule.

    • Corporate-Shill says:


      Diversity is relative. Age, employer, marital status, years at present residence, types and size of debts, age of those debts yada yada yada are the criteria to determine diversity.

      Trying to guess the formula is beyond this forum.

    • Brontide says:

      @henrygates: Seems to be some sort of normalization. It’s easier to predict the actions of someone who “fits the profile” than someone who doesn’t.

      So those who are good with money and carry a lower debt load will be penalized for not being “normal” hopefully your DTI and available credit will offset any change in score here for us smart people.

  9. Traveshamockery says:

    Dave Ramsey calls FICO scores an “I love debt” score. These changes do nothing but reinforce that perception.

    • Collie says:

      @InfiniTrent: I agree with Dave on this one, everyone bows doen to the alter of FICO, how do i raise my score, how will this effect my score, I have to charge this much each month, and then pay off this much. Now you have to go get a car loan, mortgage, and other diversified debt, what a joke.

      I don’t use debt except for the house, fortunately I will not need a new one for many years, but I guess I will have to deal with my local bank that doesn’t punch up the old computer and what for it to spit out my unworthiness. They look at me as a customer, and evaluate me on my income and financial well being. Last time I checked my number had gone done from 760 to 715, because I closed all my accounts.

      • HRHKingFridayXX says:

        @Collie: Yes, I would like to see some kind of alternate scoring that takes in to account income, lack of other debt, and savings balances for the housing market. I will be paying cash for my vehicle and other big purchases, and don’t want to be punished for such sound decisions.

    • chauncy that billups says:

      @InfiniTrent: Sure, fine. But FICO is the only damn way you can get a house, unless you have $150-$250,000 in cash lying around.

      • Tony Bauer says:

        @bilups: not true – you just have to find a lender that does things “the old fashioned way” and actually look at your financial situation and not just a score. Many local banks do this. So, no, FICO is not the only way one can get a house. As long as you have enough for a reasonable down payment and can demonstrate the wherewithal to pay the mortgage, you can get the money to buy a house.

        • Saboth says:

          @Tony Bauer:

          That may be true, but have fun paying 2% more interest on a loan from a local bank. When most places are doing home loans at 5-6%, local banks are 7-8%.

          • ConroyCotta says:

            @Saboth: I didn’t find that to be true in my case. My local, small bank did a “real” mortgage, with manual underwriting and I got a better rate than Citi or Wells Fargo offered (4 years ago). But I had a healthy downpayment and a great history to back me up.

            • SadSam says:


              I agree with Ramsey to a point. I think its crazy that people keep credit cards, apply for debt (I’ll take out a car loan to improve my score), etc. all for the FICO score. But, we live in a society that judges us based on our FICO score and its more difficult to get an old fashion mortgage (manual underwriting), car loan, student loan without a good FICO score. Factor in that employers and insurance companies also judge us by our credit and even though I love Dave and what he stands for I still want to maintain my very high FICO score (no debt except mortgage) because when I want to refinance my mortgage (like we are right now) to a super low rate that score is worth $80,000 (the amount of interest we will save).

      • Fist-o™ says:

        @bilups: Can you be more specific? Every source of info I know of says that a FICO can *affect* your rates or perhaps whether they lend to you or not, but it damn sure ain’t the *only* meter they use to judge your credit worthiness.

  10. rugman11 says:

    How are they defining diversity? Is it just revolving vs. installment? Or are they actually distinguishing between all of those types of loans. I have credit cards and student loans, but am going to be punished for not having a car loan or a mortgage or some other type of loan?

    • Corporate-Shill says:


      Yes, no, maybe.

      Since you have a student loan it is pretty safe to say you are young. Since you don’t have a mortgage it is also safe to say either you are young or rent an apartment. No car loan? Do you have car insurance? If yes, then you own a car, but not having a car loan is good.

      Do you live in a city where renting apartments and not owning a car is common place? Then not having car insurance + no car loan is fairly common.

      Diversity is going to be a complex forumla.

      I have not had a car loan or personal loan of any kind in nearly 30 years. My mortgage has been paid for a number of years. I am also 50 years old and carry zero balance on my CC. Think I am going to have a low FICA score? Think again. I just described a big chunk of people over the age of 50.

      • TouchMyMonkey says:

        @Corporate-Shill: Reminds me of that Mike Myers skit from the 80s – “Middle Age Man.” He’s got a pot belly and he’s losing his hair, but he has personal finance superpowers.

      • Adam Howard says:


        “I am also 50 years old and carry zero balance on my CC.”

        Do you mean you pay it off each month? Because I’m not sure that’s the same as a zero balance. I pay off my statement balance each month, so I’m not charged finance fees, but my card always has a balance because I use it for most everything.

    • Stephmo says:

      @rugman11: It sounds like they’re trying to find a way to assure lenders the thin-file 700s are legit. It’s not a bad thing – and it makes high-scores better.

      Basically with old FICO, there were 2 ways to have a legit 700+ score. One was to pay your bills, have low net fraction revolving burden, clean up things you owe, etc.

      The other was to be a fresh-faced college kid with a Discover Card that you kept paid with a $2000 limit. This annoyed lenders to no end since their response was always “our formula will only give a score if there’s enough credit and history to rate” – and you’d try to see why a single credit card 750 = guy with 30 years in bureau and 20+ trade lines.

      I’m guessing that Discover Card + 4 years in file =/= 750+ anymore. It won’t be wholly detrimental, but it’s not going to be superstar material either.

  11. kwsventures says:

    “A single repossession, for instance, won’t matter as much if everything else looks good.” …

    Trust me, before that car was finally repossessed, the vast majority of deadbeats stiffed plenty of other unsecured debt.

    • Stephmo says:

      @kwsventures: Ugh, they’re trying to protect grandma, uncles and well-meaning cousins that co-sign for people, but really…you should NEVER cosign unless you’re prepared for the consequences!

      That’s all lenders need are cosigners that will say, “well, the rest of my credit’s fine, so just take the car back since it won’t matter to me.” Because that won’t cost the rest of us that need car loans a dime…

    • SacraBos says:

      @kwsventures: Okay, I’m going to go out on a limb here and guess that this new “repo” rule (and probably others) is to artificially boost the FICO score. After all, if a large part of the population’s FICO drops, that means people will not be get overly-large credit lines with big interest payments. That hurts the bank, and we wouldn’t want that to happen.

      Or have they already killed us geese and taken all our golden eggs?

    • justelise says:

      @qwijybo: Um, you HAVE read the news recently, right? The banks aren’t lending much money at all. Even a vastly improved credit score doesn’t guarantee that the banks will give you squat.

  12. qwijybo says:

    So the US has a huge credit crisis going on and the best way to get it fixed is to give better scores to people who take on more debt and most likely with no real assets to show for it. What are people thinking?

    • Traveshamockery says:

      @qwijybo: Eh, I don’t know if they’re specifically rewarding “more debt”. Having a large credit line doesn’t mean you have a lot of debt. I use nowhere near my maximum credit lines on my Citi or AMEX cards (and I mean NOWHERE close). Larger credit lines show you’re trustworthy in the opinion of your creditors, so that should be reflected in the FICO score.

      The “diversity of debt” thing freaks me out a bit…I’d like to learn more about that.

      • HRHKingFridayXX says:

        @InfiniTrent: My guess is that they won’t look at the aggregate of diverse debt- say you have 30k in student loans, 30k on a car (gah, but realistic), 60k left on a house. They won’t say you have 120k, but rather too much on a car and just about the right amounts on the house and student loans.

    • David Brodbeck says:

      @qwijybo: I think you’re ascribing motives to FICO that don’t exist. The score is a risk-assessment tool. Presumably they’re making these changes because they cause the score to better reflect the risk of making a loan. It’s not because they’ve made some moral judgment about these actions.

  13. HawkWolf says:

    Obsessing about your FICO is like obsessing about your IQ or your megapixels or your MPG or your batting average. It’s just a number. If you live so it rules your life, it rules your life.

    • brandymb says:

      @HawkWolf: I agree. I could care less about that holy number. I’m retired, have decent pensions, house paid off, completely out of debt, have 3 credit cards and a HELOC of 3.5%. I don’t live every waking moment worrying about my FICO.

      • skormos says:

        I don’t live every waking moment worrying about accidentally ingesting peanuts, but then again I’m not allergic to them, so why should I worry?

  14. BillyDee_CT says:

    For those of you who follow financial guru Dave Ramsey, your credit score is meaningless if you only buy with cash and buy when you can afford to pay fully in cash. If you follow this train of thought your credit score is just a number … nothing more!

    • David Brodbeck says:

      @BillyDee_CT: For those of you who follow financial guru Dave Ramsey, your credit score is meaningless if you only buy with cash and buy when you can afford to pay fully in cash. If you follow this train of thought your credit score is just a number … nothing more!

      Assuming you never rent an apartment, purchase car insurance, or apply for a job. All of those things are affected by your credit score, these days.

      I’m hoping that the current financial crisis will wreck the credit of enough middle-class people that we’ll finally see some pressure to end the use of credit scoring for non-debt-related transactions.

      • tbax929 says:

        @David Brodbeck:

        That’s what I’m hoping for as well. Maybe a bunch of foreclosures will show I’m a better risk because I didn’t accept a loan I knew I could never afford.

      • audemars says:

        @David Brodbeck: I never got how your credit affects your job…I have less-than-great credit but have never had a problem with apartments as long as I met their 3x the rent requirements nor have I ever had an issue with jobs.

        Granted my credit issues are like 12k in student loans, 10k in CC loans (most of it is in collections =x) 1 paid of auto loan and 1 in good standing auto loan. But I know I can’t get approved for a credit card anywhere.

    • Saboth says:


      Yes, but it is a number that affects what interest rate you pay on a home (not many ppl can save up 200,000 while also paying rent), and can even determine if you get a job or not. So while it is “just a number”, it is something you should take seriously. I don’t like how the current system rewards going into heavy debt, but oh well.

      • HRHKingFridayXX says:

        @Saboth: OK, did any of you read the piece a few weeks back about how the actual credit score doesn’t affect jobs (save for working at banks or some gov’t positions)??? Obviously if they see a string of child support problems or a wave of defaults thats a problem, but they don’t see the actual number (which is the focus of this article).

  15. Anonymous says:

    how often is FICO score updated?
    I am just asking cause i am about to pay 7 k in debt this coming month, It was all from a credit card i used to pay for my last semester at school.

  16. jamesdenver says:

    Another thing I noticed is this thing called Vantage Score – which apparently widens the FICO range?

    My score is 785, which I thought was pretty good. But Experian places it as a “C” grade – between 300 and 950.

    Yes I’m obsessing over it. Plus a high limit card, (with zero or usually under $200 balance,) is in my partner’s name, but been giving me good reports for four years.

    Are domestic partners considered spouses??? Or will that card go away because it’s a “friends” card
    How do they merit a “spouse” other than common last name – which many legally married couples don’t share.

  17. Valerie Flame says:

    I have a credit card that will start charging me an annual fee this year that I don’t want to pay. I was thinking of canceling it. It doesn’t have a super high credit limit anyway and wouldn’t greatly affect my available credit ratio.

    A) Shouldn’t I cancel it to avoid the annual fee I don’t want to end up paying every year?

    B) Are the rules retroactive? As in, are they going to start judging by the new rules for your actions tomorrow and onward or going back thru your entire life?

    • acknight says:

      @Valerie Flame: Often, they’ll let you convert it to a non-annual fee card of some kind with the same card company. That way you preserve the amount of credit (and often, the date of issue) while no longer having to worry about the annual fee.

      • bwcbwc says:

        @acknight: Or go ahead open a new account with another company for a no-fee card, then cancel the old card. You’ll lose however many years of history you have with the old card, but in the long run your score will recover thanks to the new account. You can also just skip opening a new account, since you mention the annual fee card already had such a low limit.

        This advice will not apply if you’re planning on applying for a major loan like a car loan or mortgage anytime soon.

        • Valerie Flame says:

          @bwcbwc: Thanks guys. The one card w/the annual fee is an airline credit card, so I don’t think they’ll waive the annual fee but I can sure try. I wish there were a way to do a “test run” of your credit score – ask the bureaus What Would Happen If….

          A sort of WWFICOD?

          • Adam Howard says:

            @Valerie Flame:

            WRT your airline credit card — mine said on the statement something to the effect of “if there’s anything we can do to better serve you, let us know.” I called them to ask if they could cancel the annual fee, they said no, but they gave me like 500 miles. Not bad for just a phone call!

    • wyleeguy says:

      @Valerie Flame: I’m planning to d the same thing soon to three airline cards. However, not only do I not want to pay the Annual Fee, they gave me enough miles at sign up for a free flight. Once I use the flight, I quit and wait for them to come crawling back to get another free flight. I’ll take the hit to my FICO. I just got a 4th Airline card this week to repeat this all over. I always zero my card balances every month, so I use credit cards for every purchase and make 500-600 a year in cash from rewards plus a few free flights.

    • Tonguetied says:

      @Valerie Flame: Cancel ANY card that charges you fees. There are way too many out there that don’t.

      Plus when you call to cancel and they ask why, you say “Because of the fee you guys are going to be charging me.” Odds are pretty good they will waive the fee so you’ll keep the card…

  18. ceilingFANBOY says:

    Considering everything on my credit history is perfect and the only thing that keeps me from having a higher credit score is that I only have about $6,000 total credit limit and $1,000 in student loans, this is going to hurt my score.

    For loans, does it count how much you have left on your loan, the original amount of your loan, or your amount owed on your loan compared to the original amount of the loan? My loan was originally $1,800 but I have paid off $800. Is that better or worse than having an $1,800 loan that I haven’t started paying yet?

    • berribrand says:

      @jamesdenver: I’m guessing it depends on your state. If your state recognizes DPs, then the company must also in order to conduct business in that state.

  19. wardawg says:

    3. They will look at the total picture more. A single repossession, for instance, won’t matter as much if everything else looks good.

    Thank the score gods, I got screwed over by a Shop from the Future (they put the wrong address on the app and by the time I realized this the account had been sent to collections, two appeals later and still no change on my score) and it has kept me from getting any sort of decent credit at all. Hopefully this helps.

  20. rpm773 says:

    Meh. I have a mortgage, I just completed 10 years of school loan repayments, and have never missed a car payment in the same amount of time. I have an old-fashioned Amex that I pay off monthly. That’s good enough for me.

    If they don’t want my business by giving me a bad rate based on some arbitrary score, to hell with them.

  21. sifr says:

    So, what will happen is this:

    The FICO score for scads of people will go down, causing banks to reduce credit or close credit lines, which will cause these people’s FICO scores to go down, which will cause banks to reduce credit or close credit lines…

    • stevejust says:

      @sifr: well played, sifr.

      The whole recessionary downward spiral is like the Prisoner’s Dilemma, where everyone “defects” by saving money.

    • SacraBos says:

      @sifr: No, the grace on the repo’s, and likely a couple of others, is an attempt to offset this. They know they can’t risk FICO’s dropping too much, since they thrive on our debt.

      Thus the cancelling cards dropping your score trick. Make people afraid to cancel a card, in the name of the Holy FICO.

  22. crabbygeek says:

    So when I pay off my car this year my score will go down :(

    I only have about 20k-30k of credit card credit, should I start opening up new credit cards to get more available credit and boost my score?

  23. legwork says:

    Gee, am I being paranoid by thinking that banks, who issue cards, and are the largest FICO customers, had something to do with “6. Closing accounts will bring down the score?”

  24. modelchick8806 says:

    Eek, I’m a college student and unfortunately have high balances but always pay everything on time. Looks like mine is gone plummet down. :(

  25. menty666 says:

    big whoop, I’ve already got a mortgage, a car loan, a student loan and more credit card debt than I know what to do with (but I’m paying down, thank jeebus).

    Bring it on….

  26. datruesurfer says:

    The diversity crap is what bugs me. I have great credit (750-790 depending on which bureau your looking at) but the 3 current items on my report are all credit cards. When I tried to get financing for a motorcycle that I bought last summer, the dealer couldn’t get me financing unless I agreed to some ridiculous interest rate. They claimed that I was in a higher risk catagory, even though I have almost a two year history of NEVER EVER missing a payment. I ended up taking a balance transfer from an existing credit card and financed the whole thing at 0%.

    • JamieSueAustin says:

      @datruesurfer: I bought a car like that once because the interest rates were stupid. :( Overall it didn’t give me any more “win” on my FICO despite having paid the car off. It even made it HARDER for me to get another car later down the road. :(

  27. Voyou_Charmant says:

    “6. Closing accounts will bring down the score.”

    I still just don’t get this. It seems like closing accounts would ultimately free up more money because there would be one less bill to pay, one less thing to possibly let slip or screw up on.

    It just seems like an effort to keep you tied to your credit card.

    • loueloui says:

      @Voyou_Charmant: Of course it is. Who are the credit bureau’s customers? You? WRONG! Credit issuers are their customers, and boy do they know which side their bread is buttered on. You are just a commodity. A means to an end.

  28. th1nwhiteduke says:

    You people care way too much about this sort of stuff. Use common sense, quit obsessing about a score.

    It’s also asinine. If I’m in debt up to my eyeballs but always pay everything on time, and not just the minimum, I’m worse than someone who’s had something repossessed? What a bunch of bullshit.

    • datruesurfer says:

      @th1nwhiteduke: Your forgetting how your credit score is used in ways besides making a loan decision such as insurance premiums, background checks for job offers etc. For someone who is going to be graduating college within the year, I need to pay close attention to my score because it can really hurt me if I don’t.

  29. bohemian says:

    There seems to be an industry vested interest in keeping you shackled to debt as part of the FICO scheme. Since closing credit lines will hurt you they can start slapping fees onto inactive accounts.

    Not wanting to have credit cards or car loans should not be a negative event used to hurt your job chances.

  30. KHook321 says:

    I think the part about diversity sucks. My score shouldn’t go down just because I don’t have a house or auto loan. I use and pay off my credit cards constantly, and that should matter just as much as it does now. Figures that this is happening just as I’m planning to sign up for student loans for the fall…

  31. Feminist Whore says:

    1) Spouses and children can improve their credit score by being an authorized user on a credit card account, but that’s it. No more piggybacking off strangers.

    I wonder if they allow for gay couples to piggyback on one another, ya know what with them not being allowed to marry and all…

  32. Jessy Irwin says:

    Oh my goodness….I’m… art… historian… Specialize in Renaissance/Medieval Art, esp. devotional objects… top 3 favorite triptych turned into credit… score.. oh goodness, Consumerist, how I love thee.

  33. rugman11 says:

    You know, this whole situation reminds me of the BCS. Your credit score is simply a measure of how likely you are to pay back debt. Thus, using it for job applications or rental applications is going completely beyond the scope of the measurement.

    Likewise, the BCS was created to put the best two teams in the championship game, not choose the winner of the Big 12 South.

    So in the same manner that Texas should have been complaining about the Big 12 South’s tie-breaker procedure and not about the BCS, people should be complaining about employers and landlords who would use your credit score against you instead of blaming FICO for their low score.

    • SadSam says:


      Speaking as a landlord, the ability to pay back debt (i.e. be responsible with paying your bills) is a very important factor when renting to someone.

  34. Landru says:

    I agree that the FICO is the I Love Debt score. I also think the banks are manipulating it so that not only are people steered into making their payments on time, but that they are more likely to go into debt. Fuck them.

  35. TurnkeyDB says:

    As if by magic… Experian will stop selling scores through Myfico.com on Feb. 13th leaving you exactly NOWHERE to check your Experian credit report!


    • TurnkeyDB says:

      @yodel: And yes I know you can get a free credit report from the gubment but you won’t get the score.

    • datruesurfer says:

      @yodel: When you click through experian’s site on annualcreditreport.com, they ask you if you want to see your score for $7.95. As soon as you pay, you can see your score on the spot. The credit bureaus have absolutely no reason to hide it from you because it makes them $$$.

  36. loueloui says:

    Wow, my credit score actually went UP by about 30 points today. Too bad I’m too smart to buy anything fun and impulsive, and too dumb to make more money. I guess in the grand scheme of things this means nothing.

  37. LiC says:

    What if you are an authorized user on someone else’s card, which has since been sent to collections and/or written off as a bad debt?

  38. ageshin says:

    What an odd world we live in, where one value is determined by his or her ability to obtain credit. We are judged worthy by three organizations that we have no voice in, we didn’t create them, they are privet companies who hold power over us with no real accountability. In the days before credit cards, if one wanted to buy a car, the Band would decide whether to give you the loan by checking into your job and other assets to see if you were a good risk. It was a point of honor to pay them off. Now if you pay them off you get a lower score. If you think about it we all live in a kind of credit limbo, where salvation is never reached. Credit could be a useful tool if done in moderation, but no credit is just a way to keep us forever under the bank’s thumb.

  39. Corydon says:

    Item one is interesting for those of us who are gay or lesbian and in a LTR (marriage not being available).

    Now, I personally learned several years ago that handing a credit card to a partner can be a really, really bad idea, but I’m sure many couples do manage their finances together, which may include having joint credit cards.

    There are also many states that prohibit discrimination on the basis of sexual orientation.

    So does anyone else see a potential lawsuit?

  40. Trai_Dep says:

    Is it just me, or does it look like the folks on the right side of the picture are having more fun and are more interesting conversationalists?

  41. drb023 says:

    All speculation. It’s like asking your insurance co how much your rate will increase if you make a claim… NO ONE knows. I think they even break up the mathematicians that calculate this crap so they don’t even know the whole formula, like the KGB would do to spies.

    And who cares? If you are an overall conservative credit user, you will have a good score.

    Btw, I love the artwork for this post, good job consumerist.

  42. squishyalt says:

    “FICO Score” = “SUCKER SCORE”

    I was confused about the scoring used to judge “consumers’ credit worthiness” so I asked a manager at a mortgage company client of mine (I do business networks for a living) about why paying off a loan early actually HURTS your credit score.

    He was quite blunt with me and told me that the FICO score was never meant for people. It is a score used by loaning institutions to rate people on how well they pay interest. The object of the lending institution is not to have you pay back the loan as soon as possible, but to have you pay them as much interest as possible.

    If you pay off your loan early, you are not as good an interest payer as someone that lets the loan drag on for years – so your FICO score falls.

    Looking at this from the vantage point of a loaning institution, that makes perfect sense.

    The problem is that people don’t understand that FICO scores never were intended for their use. FICO scores simply tell a potential lender how willing you are to pay off your loan and pay (and pay and pay) interest.

    Once you understand that a FICO score is a way of judging you for use by intended lenders and is NOT intended for your use, you can make better decisions about your money and not really worry about how and industry is rating you for ability to extract money from you.

    People are brainwashed into thinking that they “need” a good FICO score. That is true only if you “need” to be accepted as a customer by the people that want to bleed you dry.


    • Rectilinear Propagation says:

      Once you understand that a FICO score is a way of judging you for use by intended lenders…

      @squishyalt: We’re not the ones who need to understand that, insurance companies and employers are.

    • hi says:

      @squishyalt: This is also the reason why I “a person who pays my bills on time” can’t get a cheap Dell computer (or specifically I can’t qualify for a Dell card) while my friends who owe out the wazzoo and don’t pay bills on time are able to get one, among other cards. My income is also three to four times higher than there’s, and I can easily pay for the computer in cash (which doesn’t help my score any). Not that I care, but this validates your point IE: they want people who are good interest payers and people who don’t pay on time who they can raise the interest on or add on late charges when they don’t pay on time). This doesn’t just apply to Dell either that was just one real-life example.

    • Fist-o™ says:

      @squishyalt: That is an aspect that I had not thought of. Thanks! Good information. I also agree with “Rectilinear Propagation” that it is very sad that other institutions may use the evil FICO as an assessment of a person’s overall financial well-being.

  43. sarahq says:

    “Spouses and children can improve their credit score by being an authorized user on a credit card account, but that’s it. No more piggybacking off strangers.”

    Oh, no. Jesus, just what I wanted: another way my finances will be harmed because I’m not straight. My girlfriend and I, who’ve lived together with combined finances for five years, aren’t allowed to get a marriage license — and now our credit scores will go down, because we’re no better than “strangers?”


  44. Psychosocial says:

    I would just like to know how this is legal? It CAN’T BE! Oh, that’s right, everybody is just to fat, lazy, and stupid to challenge it or actually DO anything about it. Carry on zombies.

  45. dronnac says:

    So basically, be cause I don’t have much debts and 10000 credit cards (nock on wood), I’m screwed. Gotta love it America, gotta **** love it.

  46. RStui says:

    I don’t care. I’ll close my accounts if I want, and if they’re real friends, they’ll understand.

  47. Anonymous says:

    The piggybacking rule was changed, Fair Isaac backed off last year. They will study the authorized user accounts somehow and it should not hurt everyone…..me included. Google fico 08 changes and see the updates.

  48. concordia says:

    >6. Closing accounts will bring down the score.
    If you ever needed proof that the whole FICO score concept is a scam perpetuated by the credit industry, this is it. By punishing those that close their accounts, it’s just inviting people to fall off the wagon again and spend spend spend on their now zeroed accounts. Moreover, leaving an unused (and thus untended) account open is just an invitation for potential fraud opportunities.

    But hey, you’ve only got to pay off $50 if someone steals your information, right?

    50 unwarranted dollars x however many people leave accounts sitting around = pure profit for Visa, MC, AmEx, et. al.

    :( :( :(

  49. JonThomasDesigns says:

    My ? is what if a card closes at the request of the company .. i had a Sony card , bought a tv and paid it off .. did not use it for about 8 months and went to use it and they closed the account for inactivity .. that better not hurt me

  50. thebluepill says:

    Having Less Available Credit…

    Want the REAL reson this is so important? its simple, it means you have greater access to cash, through credit, to weather a financial crisis.

    If you have $20K of avilable credit and you loose your job for 4 months, you can weather that bad spot better than someone who has $500 in available credit.

    Since the credit scoring system has no way to know how much actual cash reserves you have on hand, your available credit is the only mechanisim to gauge how potential cash reserve you already have on-tap and ready to utilize.

    If you have the ability to borrow enough to weather a financial setback, you are less likely to miss payments and are less of a credit risk.

  51. Sodypop says:

    I got my credit report and my husband’s last month (Thanks to the links provided here) Both of our scores are in the high 700’s, which it is good since we have not need to buy a new home, car or loan to remodel. Anyway, I noticed that one of my husband’s card show a date about 24 years earlier than when he truly opened it. Should I bother fix in this?

  52. SalimaLabeo says:

    “JUDGEMENT” day? Seriously?

    (It’s spelled “Judgment.”)

  53. Japheaux says:

    I am with rpm773 all the way. Have the guts to walk away from a business not meeting YOUR expectations.

    I walked away from a pretty good new car deal a couple years ago because the salesman said my APR was on my FICO score. At the time I had enough cash to almost pay off the car, and told him that, but he was stuck in the FICO world. I walked away and he flipped out. He eventually called me with a great APR and I bought the car, saving my cash to close on my house.

  54. ZukeZuke says:

    Man, this new FICO formula is completely ass backwards!

    Why does having more credit cards make you more credit-worthy for a loan? Being able to instantly get into a heap of credit card debt at a moment’s notice should make you a higher risk, not a lower one.

    Same goes for having more than one authorized person on an account. That just adds to the possibility of accumulating more debt instantly and reducing your ability to pay off a loan! What the heck.

    With this kind of cockamamie logic, it’s no wonder America is in such a financial mess right now! Sheesh!

  55. Anonymous says:

    “”6. Closing accounts will bring down the score.””

    Why would closing accounts bring down the score? I was always taught that the less accounts/debt you have, the better.

    These new rules sound like they were created by the banks themselves!

  56. DustoMan says:

    6. Closing accounts will bring down the score.

    So if I close the accounts I haven’t used in years, it will bring down my score?

    • flyromeo3 says:

      In many cases YEP! I only closed one of my cards and my score went up. Banks nowadays are canceling lines of credit so be weary of that because that will effect your score.

    • Snakeophelia says:

      @DustoMan: It certainly used to. I closed two cards in 2002 that still had a balance, and when I paid them off in full, my score plunged. Go figure.

      Note to someone else who mentioned this topic earlier – this is not the same thing as paying off a loan. Paying off a loan in full will definitely raise your score.

  57. berribrand says:

    5. Diversity matters more. A mix of healthy auto, personal and student loans would bring up a score. (Yes, I have all three.. credits are paid off every month but my report shows relatively small balances on the ones that I actively use on a monthly basis. LOLwoot!!)

    6. Closing accounts will bring down the score. (Urg, I guess I have to maintain my Citibank card even though I am morally tempted to close it.)

  58. Fist-o™ says:

    OK EVERYONE! I offer to be the Guinea Pig. I have no debt, no credit cards, and don’t care about my FICO score. My wife has one CC that I wish she’d close. She probably won’t, but. anyway. Within the next 2-3 years, we’ll be attempting to purchase a house. I will let you know what my FICO score is at that point; and what rate I get on my mortgage. I’m willing to bet that whatever institution I go through to fund my mortgage understands that I have a remarkable ability to pay back the money they’ve lent me.

  59. vermontwriter says:

    Worse, the cards I do have that had plenty of room available. My husband’s – Citibank dropped our available line of credit down about $100, so that now we only have about $100 available. And then Bank Of America did the same thing with mine only leaving me $300 from the $1800 where it was.

    So I know our credit is going to take a hit because of their action.

  60. jamesdenver says:

    “Spouses and children can improve their credit score by being an authorized user on a credit card account, but that’s it. No more piggybacking off strangers.”

    Oh, no. Jesus, just what I wanted: another way my finances will be harmed because I’m not straight. My girlfriend and I, who’ve lived together with combined finances for five years, aren’t allowed to get a marriage license — and now our credit scores will go down, because we’re no better than “strangers?”

    Grr. /quote

    Exactly — i noted on the first page I’ve been sharing a card with my sig other for four years. It’s in his name, but i make all the payments and use it – and it’s really helped my credit.

    now it will dissapear from my record?

  61. Anonymous says:

    4. Having less available credit will drag down your score more.

    6. Closing accounts will bring down the score.

    So, basically, the only real way to have a decent credit score now will be to have a whole slew of credit cards. Terrific. (And just because you pay for everything in cash does not mean a good credit score isn’t helpful. I have no credit. Literally. Because I’ve always paid in cash. It has hurt me – on cell phones and such. Fortunately, I have a husband with a great credit score. Which will probably go down this week, as we only have one credit card.)

  62. Clydie King says:

    Well, you still get penalized for being financially “responsible” and not widening your credit limits, not using your credit cards enough, and not diversifying your debt to all areas of your life: personal, home mortgage, school, car, clothes, appliances, etc. The person who saves and buys his car and big screen TV without monthly payments and closes all unused credit accounts is a chump to FICO. It’s a racket, but the crooks make the rules, and they change them however they deem fair to themselves only.

  63. Anonymous says:

    FICO is not the only credit score used by lenders or bureaus. Many, many, many of them use custom models that may resemble the FICO, but FICO they are not. Custom scores are used by car manufacturers, national banks (auto, mortgage, insurance, the whole bit), regional banks, local credit unions, furniture stores, very popular online lending aggregators, etc.

    It’s pretty apparent that most consumers don’t realize this; FICO is “king” of credit scores only through lore and for certain businesses. Every time a lender utilizes a FICO, they pay a transaction cost to rate you with that, which is why FICOs tend to be used by non-chain apartment complexes, etc.

    Get off the FICO prison train and stop trying to game it; in the vast majority of cases, the FICO in particular isn’t going to be used anyway.

  64. Steven Wadsworth says:

    I still don’t understand why canceling/closing a credit card account would bring down my score. If I have 4 or 5 cards, and I don’t used 2 or 3 why shouldn’t I be able to close my account without hurting my score?

  65. FrugalFreak says:

    You can refuse to play with them though! easy NO, Doable? YES. just pretend like credit doesn’t exist and use all cash.

  66. Anonymous says:

    I have a travel rewards credit card (two, actually) and I make all my monthly purchases on this card and pay it off in full at the end of the month. The credit limits are in the 5 figures now, and I don’t ever use nearly that much. The problem is, this company (citibank) does not report the amount used, and on my credit reports it always shows ***100% used*** up to the limit. ALWAYS. I’ve called them and asked them if it was possible to change, but it is not. Is there anyway to improve my credit (which is extremely good and only dragged down by these cards showing full usage)?

  67. Todd Newberg says:

    There seems to be alot of confusion over available credit and closing accounts.

    It seems counterintuitive at first glance but here’s the scoop.

    It’s essentially all about current debt owed divided by total value of credit lines available.

    If you carry a $4,000 credit card balance and have 5-6 other credit cards with nothing owed on them and the total of all credit lines on those cards is $75,000 then the banks see you as an acceptable risk.

    $4,000 / $75,000 tells the banks that if the crud hits the fan, you have $71,000 in available credit to back you up.

    The most common mistake is when people close their credit card accounts after paying their card off.

    Lets say you worked hard at paying off a huge credit card debt of $40,000 and then closed the account.

    Now the banks see you as such: $4,000 / $35,000. Less cushion as you see.

    The whole idea is to NOT carry debt on credit cards, the idea is to have a number of open cards to increase your credit line available figure. It’s also a good idea to request credit line increases every 6 months to help build up your FICO score. Do it much more often than that and it looks like your preparing for a loss of income or hard times lie ahead.

  68. SheetalGautham says:

    Having a good credit score does not mean having debt. Learn to play this game properly so that when you NEED credit you have it- leverage for some unplanned event or need. Just because you have credit cards doesn’t mean that you have to max them out. The finance world (used to, and will be forced to revert to) giving credit only to those who can REPAY it, so building a comprehensive credit history (AKA your score) is a prudent, smart thing.

    Knowing how they build that score is like having cheats to a game.

    It’s not an arbitrary score- it is based on your past performance; they use it to predict future results.

  69. FriarJohn says:

    If you need your FICO score you can’t afford to buy whatever it is you’re trying to buy. If it’s a house, you can always try manual underwriting. And even if you qualify chances are you can’t afford it anyway.

  70. Anonymous says:

    “and there’s nothing you can to do stop it”

    Some people are totally paranoid about data that governments collect on them. I would say that 99% of what governments at all levels have on me I gave them. I never heard of Experian, Exuifax, and Transunion until a few years ago. They have collected a wealth of information on me. I gave them none of it, and they are the only ones who have ever used information against me.

  71. Justin C Cummings says:

    geez. I’m screwed no matter what. I have an ARM mortgage @12.5% and student loans that I can’t pay. I can’t refi with countrywide because of my student loans.

  72. Bill Szczytko says:

    These changes seem to be more about trying to get everyone to own credit cards with high available credit then about being smart with your money. It’s more PRO-credit card company then about rating an individual. Sad.

  73. Anonymous says:

    Am I the only one who thinks this is absolutely ABSURD???? Over 7% of Americans are out of work and can barely pay their bills and mortgages, ppl are losing their homes, and the main reason for this crisis is we’re in debt!!! It’s time to close those credit accounts and start paying cash!! If you don’t have the money to buy, DON’T!!! And FICO wants to tell us if we don’t have a slew of credit cards and use them they are going to lower our scores??? Good Lord this country is backwards…

  74. nmaster64 says:

    #6, given that they don’t care if the account has a ZERO balance, is complete and utter bullshit, and total injustice.

  75. mwc5446 says:

    Is this why I received letters from all of my credit cards this week ‘increasing’ my credit limit?

  76. Anonymous says:

    Canceling / closing accounts has always impacted FICO scores negatively because the average age of all accounts can change. When closing the accounts you’ve had the longest (say, since 1990) the average age of accounts portion of your score will then be calculated based on the next oldest open account (say, 1997). Frankly, this system is antiquated and unfair because it makes you look like you havent had as long a credit history as you actually have, even though record of the account stays on your report for x amount of years (I think 7).

    Also, when closing accounts your debt to available credit ratio is impacted, meaning that if you have 40k in available revolving credit and 10k charged to that credit across all accounts, your ratio is 10/40. If you close a card that has 20k of available credit, your ratio becomes 10/20. You can see how bad that looks – from carrying 25% of your available credit as debt, to 50%. It makes you look like you are less able to manage your debt well, that you may be financially in trouble, and that increases your risk as a debtor. Consequently your score goes down.