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Video: How Does Opening and Closing Credit Cards Affect Your Score?

One of the most commonly asked questions among Miles & Points newbies is how opening and closing credit cards actually affects your credit score. 

In this video, let’s clear up some of the misconceptions around this topic by thinking about how each component of your credit profile is affected by each step along a credit card’s life cycle, from the initial application to the first statement being posted, through to product-switching and, if necessary, cancellation.

By breaking down the individual impact to your credit health at every step along the way, you can see how playing the credit card game in a responsible fashion can end up strengthening your credit score over time. 

Without further ado, you can watch the video below:

 

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4 Comments
  1. amboyd

    Great article…Recently switched form RBC Infinite Avion to TD Aeroplan Infinite Privilege …Will downgrade the RBC card, but is it necessary to use on occasion, or is letting it sit with zero transactions the same? Trying to consol all my spending on the TD card to max out the SQM/SQS boost benefits (in addition to other benefits)…Not worried about small dips in credit rating, but AVION is my long time card on my file for sure.

    1. Ricky YVR

      It won’t hurt to let it sit with zero transactions. It won’t actively help either. If you aren’t worried about small fluctuations in credit score, then I’d say just leave it.

  2. J daniels

    Great video. How does charge cards impact credit score? Can you downgrade? I’m thinking of the Amex Platinum. Thx.

    1. Ricky YVR

      Different credit scoring models treat charge cards in different ways. Some credit score calculation models use a “high credit” in place of the credit limit, which is the highest statement balance that a cardholder has had over a period of time; however, other credit score calculations models exclude charge cards entirely from the utilization criterion. If the model uses a “high credit” in place of a credit limit, then you’ll necessarily be posting 100% utilization on your first monthly statement on a charge card, which may also exacerbate the slight negative impact of opening a new card.

      You can’t downgrade the Canadian-issued Amex Platinum Card to another product.

Ricky Zhang

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