Protecting our credit score is crucial to the points game, especially if you want to continually take advantage of sign up bonuses. Today, I will focus on the credit history factor, which accounts for 15% of your overall credit card. Just a quick recap on what credit history consists of.
Credit history is based on when an account was opened along with the record of the last activity. The longer the history and the more activity, the larger the sample size to determine what kind of track record you have. Good or bad, most information will automatically be removed from your credit report after 6 or 7 years.
So it is good to have some credit cards with a long history, that is in good standing, so there is a longer track record. But often times, the terms and conditions of a credit card may change or we may simply want to change credit cards to take advantage of a better promotion or better returns per dollars spent.
One of my favourite ways to preserving my account history is to transfer our existing credit card, instead of cancelling, to another credit card within the same financial institution. This way, our account history will be preserve and we can take advantage of another credit card offer.
Unfortunately, not all credit card companies allow you to do this. So you will want to do some research on what options you have when it comes time to decide whether to cancel or transfer a credit card.
I will also note that for example, if you have a credit card with a $1,000 credit limit, but you transfer to another credit card that requires you to have a minimum of $2,000 credit limit, that means you will be required to do a credit check to determine whether you qualify for the additional credit limit. This may work to your advantage anyway, because it increases you overall credit limit which will help you credit-utilization ratio, but it will be a slight credit hit during the credit check.