Plastic Balling: Increasing Your Credit Score through Churning

In our Credit Basics section we have described how your score is calculated by lenders. After being asked, "Doesn't opening and closing credit cards negatively affect your score?" it dawned on me that we have not fully explained how we use this game to not only keep our scores stable, but earn the status of what my old roommate called "Plastic baller"!

Again, please refer to the Credit Basics section and be sure you to read up on articles by actual credit experts (we are not) before you even be looking into this hobby.

Let us take that question apart, since its really two questions. The first question is "does opening a credit card hurt your score?" Yes it does. It creates a hard inquiry to your score. Typically it will drop about 2-5 points. With on time payments in full, your score will bounce back in a matter of months.

Second question: "Does closing your account negatively affect your score?" This is a little more complex. The actual process of closing the account does not affect your score, but the consequences can in terms of utilization.

Utilization is equal to your total amounts owed divided by your total credit line, or:
Utilization = (total amount credit owed)/(total credit line)


When you close an account and completely get rid of that credit line, you lose a portion of your total credit line. Lets say you were at 30% utilization before closing. Now that you've closed you have suddenly jumped up to 50% utilization, which WILL negatively affect your score.


If you have no balance, then this utilization talk is a moot point, just like my ability to have a proper discussion with David.

So how does one become that legendary "Plastic Baller"? Generally more credit lines that are in good standing equals better score. The more credit lines you have open, the higher your total credit limit. Sadly for the most of us, our spend is relatively fixed, so with higher limits your utilization goes down, and in turn your score goes up. Get the pattern here?

Since starting this game, I have applied to around 8 new cards in the past 2 years and have canceled only 2 of them. My score has increased overall by ~30 points according to Credit Karma . Many of the churners brag of 800+ FICO scores and churn 4 cards every 3 months, I'd consider that "Plastic Baller" status.

Disclaimer: David and my jobs are the furthest from financial consulting as you can think of, I'm pretty sure we lose money by working. All of this information is aggregated from multiple sources and is an interpretation of that. We do our best to provide accurate information but encourage you to read more on credit scores.