Thinking about "changing" credit cards...

[MJtwelve]

Hello fine people,

I want to thank you on your advice to me in my previous threads.

I am not the most credit savvy person so apologies in advance if I sound like I don't know what I'm talking about.

I have a credit card that I've had for a few years, applied for it while I was still in school. It is a very basic student card with no bells and whistles (it has cashback but it is a joke).

About a year ago, after finishing school and getting a moderately better paying job than I had while in college, I applied for and received a second credit card with decent cashback (chase freedom... as I'm already a chase customer and also I got that $500 bonus offer after spending an amount in 3 months).

Now, I didn't close out my first credit card (which I barely use.. just once in a while so I don't get dinged for no activity or something on my score) because I had heard that closing a card hurts your credit score.. not to mention it would impact my credit limit and I would have to lower my credit utilization. First of all I wanted to confirm if this was correct? Again my apologies for being a complete idiot when it comes to credit.

The reason why I ask this is because I have had my eye on a chase united credit card with a nice mileage bonus that I am considering, because I would like to take a trip sometime and cannot afford to pay for a flight so some free miles would be nice, but I would not want to have 3 credit cards as I'm pretty sure this would hurt my score as well.

If I were to close out my old student card that I no longer use.. and then in "place" of it apply for this other credit card I am considering, would this hurt my credit? As far as utilization goes after closing out a credit I can pay off my freedom card in full so that wouldn't be impacted, but I wanted to make sure I would not be hurting my credit by making this move. My credit score is not perfect (I have not always kept to the 30% utilization mark) and I would like to avoid hurting it more if at all possible.

Any and all responses are always greatly appreciated.

Thank you

[neatdesign]

Regarding closing your first credit card: You don't say when you opened that account so it's unknown how much, if any, closing it would ding your credit score. In my opinion, the shorter your credit history, the longer you should wait to close out the first account that established your credit history in the first place.

Regarding how utilization and limit-to-debt ratio affect your credit score: If you pay your bill in full each month then utilization becomes a non-issue. It's only an issue if you carry a balance from month-to-month.

Generally speaking, you should only use credit cards if you can pay the balances off each month, anyway. It's the best way to live within your means and also maximize the benefits of any rewards program the card might have.

If you don't plan on paying your balance off in full each month, then I recommend sticking with what you have now until you are in the right mindset and financial position to be able to do so.

Just my 2 cents.

[MJtwelve]

I opened it actually now 3 years okay, which started my credit history. I can pay off my balance each month but I leave a balance because I heard that is what you need to do to get any credit score

[kv968]

I opened it actually now 3 years okay, which started my credit history. I can pay off my balance each month but I leave a balance because I heard that is what you need to do to get any credit score

I'd keep the first card open (as long as you're not paying a fee) as you're doing just to keep the "history" but I'd also apply for the 3rd card if you want it. The initial "hard pull" that the CC company does to approve you may ding your credit score a bit but having a 3rd card won't.

And you DON'T have to carry a balance on a card to get a credit score. Pay it all off before the due date and you'll be fine.

[neatdesign]

I can pay off my balance each month but I leave a balance because I heard that is what you need to do to get any credit score

Sorry, but whoever told you that was wrong.

Your payment history makes up 35% of your credit score. All that matters is that you 1) pay your bill on time each month; and 2) pay at least the minimum payment due. If you pay your full statement balance by the due date, you've met both of these criteria, and that's all that matters.

The only one who benefits from you carrying a balance each month is the credit card company, because they can charge you interest on the amount you carry over and make money off of you.

[snafu]

MJ, who ever you've relied on for advice about CCs is wrong. You are unnecessarily paying interest and getting no benefit what-so-ever. Look at your statement carefully, it will give you both the billing date and payment Due Date. It's a good idea to pay the balance at lease one business day before the Due Date. It's easy to pay from your on-line bank account site. The Billing Date is important anytime you have decided to make a major purchase - buying it one business day after the billing date will give you an extra cycle to pay the balance without incurring any interest.

Unless you are planning to borrow a major sum, there is no reason to fret over your credit [FICO] score. Many of us are paying utilities, insurance, groceries, car operations and other regular expenses via our Cash back benefits CC since we pay the balance in full each month.