- Payment history counts for approximately 35% of a score. It is the most heavily weighted factor used in calculating your credit score. Consistently paying your bills on time has a positive influence on your score, while late or missed payments will hurt y
I have used my Chevron credit card since 1991. Chevron is leaving my state. Should I close this account, and if not why?
I have had/used a Chevron Credit Card since 1991. I charge gasoline for the month and pay the entire bill when I receive it. Chevron is pulling out of WV and in a few weeks I will not be able to use the card in my state any more. I want to maintain my excellent credit score, so do I keep the card and possibly never use it again or do I cancel this card?
The short answer is, "Keep the card." Read on to learn why.
Start by reading the Bills.com resource Opening, closing credit card debt accounts can hurt scores. Two other articles on closing accounts and credit history provides insights on how your credit score is calculated and how closing an account affects your score.
Closing an credit card account
Closing out this account can negatively impact your credit rating. Whether this will, in your case, I cannot say. Length of positive history is just one of several factors that impact your overall credit score. If you do decide to close the account and experience a negative impact it may only be temporary. Continuing to make monthly payments on time to a mortgage, auto loan, or other lines of credit will typically reduce the impact and also help improve your scores over time. Below I provide an outline of the different criteria involved in calculating a credit score.
There are five key factors that go into calculating your credit score, with certain items carrying more weight than others. These factors are as follows:
1. Payment history
Payment history counts for approximately 35% of a score. It is the most heavily weighted factor used in calculating your credit score. Consistently paying your bills on time has a positive influence on your score, while late or missed payments will hurt you in this area.
If you have delinquent payments, the older the delinquency the less the negative impact on your score will be. Collection accounts and bankruptcy filings are also taken into consideration when analyzing your payment history.
2. Total debt and total available credit
Total debt and total available credit counts for about 30%. This section looks at how much debt you have compared to the total available credit on your accounts. If all of your accounts are maxed out, you will be considered a poor credit risk, because it appears that you are struggling to pay off the debt you have already incurred.
3. Length of positive credit history
Length of positive credit history counts for about 15%. The longer you maintain accounts in good standing, the better your score will be. This shows that you are able to make a long-term commitment to a creditor and are consistently responsible about making your payments.
4. Mix of types of credit
Mix of types of credit counts for approximately 10%. Having several different types of credit, such a credit cards, consumer loans, and secured debt, will have a positive influence on your credit score. Having too much of one type of credit can have a negative impact.
5. New credit applications
The number of new credit applications you have recently completed accounts for about 10% of your score. Applying for too much new credit in a short time period makes indicates that you could be credit risk, as you may be desperately trying to keep your head above water. The models make an exception for people who are shopping around for a loan, so if you are simply applying to see who can give you the best rate on a new loan, you need not worry too much about damaging your credit score.
While you cannot calculate your own credit score accurately, you can review your credit report for on the five factors named above to get an idea of whether the accounts listed on your credit report are hurting or helping your credit score. You can then take action to improve any potential problems, such as paying down your balances or paying off collection items.
To learn more please visit an article I wrote FICO Score Calculation. Another article you may want to read is Credit Card Changes, Opting-Out, and Credit Rating.
Do not close the account. Instead use it when you visit states with Chevron stations. That way the card remains active and continues to support your credit score.
I hope this information helps you Find. Learn & Save.