05-05-2013 10:32 PM
closed accounts still do report most of the time, so they do not affect your AAoA right away.
once they fall off your report, you will then see the AAoA hit.
most of the time they stay on for 10 years after they are closed, but it depends on the lender. if they choose to not maintain the updates, your account can possibly fall off right away or anytime they decide to stop. Equifax / Transunion have been somewhat purging certain closed accounts that have disputes filed.
05-06-2013 05:10 AM - edited 05-06-2013 05:20 AM
The most significant hit you take from closing accounts is to your Utilization variance....AAOA doesn't really matter.
Unless the Card is charging an AF, I would leave it open and let the Creditor Close it for non-use....There's no harm with it being open and helps your Utilization.
If you have a significant CL on the card, I would even go as far as to charge a little something to it once/twice a year and PIF before statement cuts just to keep it open and serve your Utilization variance. Even if you only charge 5-10$ to it at the grocery store, I do this now with a very old Cap 1 I have that has no AF but has a 4K CL, every so often about twice a year I'll pay my Verizon or Comcast bill with it..
05-06-2013 05:50 AM
05-06-2013 07:40 AM
So I did a lot of reading about canceling credit cards because I wanted to cancel my two oldest credit cards. They we're horrible cards low limits and high interest rates. (First Premier and Capitalone) All the advice I found said the exact same thing, "Don't cancel your oldest credit cards because it will lower your average age of accounts". Tiered of carrying bad cards that I could do nothing with, I cancelled them both. I have had them for about 8 years each so I was really worried about the impact that it would have on my credit score. I was shocked to find out that my credit score actually went up 20 points! How could this possible happen. Well I realized that the average age of account is not calculated based on your oldest credit card, it based on your oldest account period. It doesn't differentiate between revolving, installment, mortgage or even closed account. Because of this my oldest account was actually a student loan that was taken our my freshman year in college. It is still listed as my oldest account and thus my Aaoa wasn't drastically effected. So if you have student loans or any other account, their age actually helps your Aaoa. If you want to cancel your oldest credit card and you have older student loan or any other type of account do it. No use being stuck with a bad card if you don't have to be.
If you were wondering my credit score are
767 EX FICO (Pulled last week by AMEX)
785 EQ FICO
770 TU FICO
Personally, I think you were smart to close them. As you stated, low limits/high interest. Yes, it won't hurt to keep them open and SD them if no AF, but they are also not growing with you and therefore not really helping. The impact as has been stated, is not on the AAofA, but on the utilisation. However, with low limits, the impact would be minimal and as you stated, you gained 20 points. Based on your signature scores I think you're at a point where you can certainly get better, so there's really no reason NOT to jettison those trash cards!
I dumped a low limit/toy card HSBC card last fall and saw no negative impact at all. Losing a $1550 CL CC didn't hurt my util at the time, since I also replaced it with a much better card in that same month.
Time for you to move ONWARD AND UPWARD! And welcome to the forum!
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