If I have had a credit card for several years, (my longest open credit
card account)but it is not as good as the new offers I receive now, is
it bad for my credit score to cancel that account? Or should I keep it
based on the fact that I have had it for so long, about 6 years.  I am
now 24 years old. And just got offered a Plat Amex Card that I was
thinking about applying for.

Hi dj2965,

Changing credit card accounts may have a negative effect on your
credit score, but if it does, the effect is likely to be minor.

The most specific information I found on this was in the document
"Understanding Your Credit Score," from Fair Isaac Corporation,
developer of the widely used FICO credit scores.

http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf

On page 14 (page 16 to Adobe Reader), it says:

"FICO scores consider inquiries very carefully, as not all inquiries
are related to credit risk.  ...  Inquiries don?t affect scores that
much. For most people, one additional credit inquiry will take less
than five points off their FICO score. However, inquiries can have a
greater impact if you have few accounts or a short credit history.
Large numbers of inquiries also mean greater risk: People with six
inquiries or more on their credit reports are eight times more likely
to declare bankruptcy than people with no inquiries on their reports."

An application for a new account counts as an "inquiry."  Considering
that a FICO score is likely to be several hundred, five points is not
very signficant.

Other web pages on credit scores agree that too many inquiries can
hurt your score, but it seems unlikely that one application would be
considered too many.  Your current account would stay on your record,
so changing accounts would not remove whatever score you have built up
from that account.

United States Federal Trade Commission page on credit scoring
http://www.ftc.gov/bcp/conline/pubs/credit/scoring.htm

Article on credit scoring on MSN Money by Terry Savage 
http://moneycentral.msn.com/content/Banking/Yourcreditrating/P41801.asp

Experian credit scores FAQ answer on the effect on a score of shopping for credit
http://www.experian.com/consumer/credit_score_faqs.html#shop

Disclaimer:  Your credit score will be affected by many factors. 
Google Answers only provides general information and cannot guarantee
what will happen to your credit score as a result of changing credit
card accounts.


I hope this information is helpful.  If you need any more information,
please ask for a clarification.

--efn

---

Request for Answer Clarification by dj2965-ga on 02 Jan 2005 13:49 PST

inquiries- what does that mean. Could you please expain anything that you could.  

"People with six inquiries or more on their credit reports are eight
times more likely to declare bankruptcy than people with no inquiries
on their reports."

---

Request for Answer Clarification by dj2965-ga on 02 Jan 2005 13:53 PST

If I check my own credit, how often should I be checking it,and is it
bad to do it more than once or twice a year?

---

Clarification of Answer by efn-ga on 02 Jan 2005 14:45 PST

Hi dj2965,

When anyone asks a credit reporting agency for a report on a person's
credit, that counts as an inquiry, but not all inquiries affect the
credit score.  For example, if you request a report on your own
credit, that is an inquiry, but it doesn't affect your score.  The
inquiries that affect your score are those generated by your
applications to businesses for credit.  Those are the ones where
having too many will lower your credit score.

Additional Links

FAQ answer on inquiries from the credit reporting agency Trans Union
http://www.transunion.com/content/page.jsp?
id=/personalsolutions/general/data/CreditScoreFAQ.xml#5

FAQ answers from Experian
http://www.experian.com/consumer/credit_score_faqs.html#inquiries

Explanation of what an inquiry is from mycreditcheck.com
http://www.mycreditcheck.com/credit-inquiry.aspx


Opinions vary on how frequently you should check your credit report.

Experian says to check it before applying for credit or a loan.
http://www.experian.com/consumer/credit_report_faqs.html#often

The California State Office of Privacy Protection says at least once a year.
http://www.privacy.ca.gov/

The CreditTalk website says you should check it "at the beginning of
every year, six months before buying a new car, home or other major
purchases and six months before seeking a job that requires a security
clearance or background check."
http://www.credittalk.com/goodcredit/getcopy.html

Michael T. Killian, About.com's Guide to Credit Management, says once
every six months to a year.
http://www.realestate.com/learning-center/your-credit/check-your-credit-report.asp

Trans Union says every 90 days.  Note that reporting agencies like
Trans Union make money when they can sell you credit reports
frequently, so their advice may not be unbiased.
http://www.transunion.com/content/page.jsp?id=/personalsolutions/general/data/ManagingCreditFAQ.xml#11

Annie Bauers on the digits.com site says every three months.
http://www.digits.com/articles/credit--checking-your-credit-report.htm

CarTrackers.com says once a month.
http://www.cartrackers.com/truecredit/faq/#anchor1b

Finally, at the ridiculous extreme, credit report vendor ReliaCredit
says you should check your credit report "as routinely as you check
the weather."
http://www.reliacredit.com/faqs/#No23

Personally, I think twice a year would be plenty, unless there is a
particular reason for a check.

An amendment to the Fair Credit Reporting Act (I am assuming you are
in the United States) will entitle you to one free credit report per
year per reporting agency.  It is currently being phased in, so the
free report may or may not be available to you now, depending on where
you live.

http://www.ftc.gov/bcp/conline/pubs/credit/freereports.htm

There is no reason other than cost and bother not to check your credit
report more than twice a year.  Checking it will not affect your
credit score.

I hope this helps.

--efn

Check that the Amex is a Credit Card - not a Charge Card
- there is a big difference

Curiously, credit ratings tend to be built up by borrowing.

Personally I am unimpressed by Credit Card offers, they are only
really interesting if one is up to ones neck in credit card debt.

Curiously, credit ratings tend to be built up by borrowing.
    WHat does this mean?  Sorry to ask a simple question, but wasn't
sure of the answer.

If you do not use credit then you do not build up a 'credit history'

This goes for individual cards and your entire credit profile.
Lenders want to see that you are likely to repay the debt, and the
best way they can see that is by seeing a history of borrowing and
repaying.