This discussion refers to my original thesis that we do not know the exact algorithm used to calculate the credit score. All we know are speculations. Nobody except the banks knows.
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Originally Posted by safari
Based on my experience and from talking to different people this is not true. I have 8-10 credit cards (too lazy to count) and my credit score is in the top 700's. I know people who have 20+ credit cards and their credit score is excellent. What affects your score is when you open a new account, but if you have a bunch of existing accounts, closing them won't improve your score.
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I respectfully disagree. This is not the scientific method to study the effect of a variables on an unknown system.
You have to hold everything else constant, and change one thing. Then you observe the effect in the system. Replicate the effect multiple times and maybe you can have some confidence that changing X causes Y to happen in the system.
In this case, closing an account increases credit utilization, but there are also other metrics that are affected. Some of these were discussed above, e.g. easy access to revolving credit, number of open accounts, etc.
For you, your score may be high, and that may be sufficient for you, but perhaps your score could be higher? If you take the position that since the score is already high so you don't about the effect of closing accounts for your personal situation, then your comments are not relevant at all to the discussion.
The only way to be somewhat certain is to close accounts and see if your score goes up. Of course the best way is to get access to the credit rating algorithm.
EVERYONE IN THIS THREAD IS SPECULATING ABOUT HOW CREDIT SCORING ALGORITHMS WORK. Like I said in an earlier thread, these algorithms are industrial secrets and are not published.
Everything I said can also be considered speculations as well, albeit they're speculations from my years of experience in the industry. If you want to discount my experience and interject your own opinion then that's fine as well. Your guess is just as good as mine to the extent that no one knows for sure.
For all we know, it may just be someboy throwing darts at a dartboard to come up with the credit score.
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Originally Posted by safari
As far as identity theft goes, even if you close your account, your record still exists at the bank, so if someone hacks into their database, they will steal your information anyway.
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This has been addressed above so I won't comment. To the extent that databases can be hacked, this risk is inherent regardless if the account is open or closed. If th account is open though, you're exposed to more risk by exposing the open account to charges.
In the end it depends on what you're comfortable with. I don't recommend trying to "game" the system to improve your credit score because you do not know how gaming may affect your credit profiles in other ways.
I suggest closing all accounts you do not use. If you insist on leaving them open then make sure you monitor these accounts and talk to your loan officer when applying for a large loan about readily available access to credit.