topic Re: Closing Accounts in Understanding FICO® Scoring

Closing Accounts

cowgirl79 — Sat, 22 May 2010 23:37:18 GMT

I have always been told to never close accounts, to just tuck the card away and use it for gas every other month or something. I am at a high utilization at this point, about 90-95%. I'm paying 4 cards off this month and was just planning to close them. They are subprime cards with A/f and 20%+ interest rates stuck at 300 to 500 cl. I figure getting rid of these guys cant hurt me because I'm already maxed on my utilization. Is that right?? My scores range in the low to mid 600s.

Thanks.

Re: Closing Accounts

beamMEup — Sat, 22 May 2010 23:57:22 GMT

Hi cowgirl,

If you are at high utilization, consider keeping open any cards that you can handle the AF on, and keep all of them open until the AF is due.

That will help your utilization - which you say is maxed. When your utilization is down, then consider closing cards.

If you would, tell us how many cc's you have, their CL's and balances, and their AF's. You'll get some good feedback with that additional info.

Re: Closing Accounts

cowgirl79 — Sun, 23 May 2010 00:35:04 GMT

I have 7 cards.

Beast Buy MC 300/261 bal. 14.99% a/f 59 open 9 months, never late

Beast Buy MC 300/289 bal. 20.99% a/f 59 open 2 years, never late

Capital One 750/740 bal. 14.99% open 9 months, never late

Capital One 500/500 bal 21.99% open 4 years

Hooters 500/500 bal 29.99% a/f 8 billed monthly open 2 years, never late.

HSBC 300/290 bal 14.99% a/f 59 open 1 years

BOA 300/300 bal 12.99% a/f 19 open 2 years. It was originally a secured card. Once I got it unsecured I could never get a CLI. I wanted to "resecure" it so I could get some higher limits going. Suzi keeps telling me that since I don't have any high credit limits, no one will ever give me one.

I'd like to get rid of both best buys, hsbc and hooters. i cant get an CLI on any of them. Plus the interest rate from Hooters is insane. The others will be paid down so my total utilization will be at 50%. In the next 4 months as long as the roof doesn't cave in I will be at zero balances. Once that happens I'd like to combine CL from Capital One.

I'm just trying to make the best out of it. I hate the idea of paying another annual fee, especially to a card that hasn't done me any good.

Re: Closing Accounts

cowgirl79 — Sun, 23 May 2010 00:47:27 GMT

My other question is that if I close these other accounts that are only a few months old, will that help increase my AAoA or lower it? I know thats a factor too.

Re: Closing Accounts

RobertEG — Sun, 23 May 2010 03:16:46 GMT

Once an account is posted to your CR, its subequent status as open or closed has no effect on inclusion of its aging from the opening date, and thus makes no difference in your AAoA calcuation. Closing an account is not the same as deletion of the account from your credit file. FICO continues to score its age until such time as the entire account is deleted from your credit file, which is normally not until at least 10 years from the date of account closing. By not closing it, you can possibly keep the increasing benefit of its account aging in your CR for many years to com by delaying its closing..

The only substantial reason to close an account in good standing is to avoid payment of annual fees. That is strictly an indiv. choice, based on financial, and not FICO. considerations

Re: Closing Accounts

beamMEup — Mon, 24 May 2010 16:37:47 GMT

cowgirl79 wrote:
My other question is that if I close these other accounts that are only a few months old, will that help increase my AAoA or lower it? I know thats a factor too.

Robert's right. Closing accounts doesn't affect AAofA. AAofA is calculated using all the accounts on your CR (except, I believe, Collection Accounts).

It is calculated from open date to current date whether the account is open or closed.

Here's a helpful link on closing accounts (it's also sticked at the top of the Credit Cards forums:

Closing Credit Cards