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Question re: closing cards/AAoA

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toothgrind3r
Established Contributor

Question re: closing cards/AAoA

Quick, possibly silly, question.

If I understand correctly, closing accounts doesn't effect you in a negative way in regards to AAoA, as it stays on your credit report as a positive TL for up to 10 years.  Only potential negative would be utilization.

 

So lets say, I got most of my 15 or so cards in the past 1-2 years.  So AAOA is not so great now.  Let's say, I want to close maybe 10 of them fairly soon.  Let's also say that I have no desire to get back to the point of having 15 cards again...so in the foreseeable future I only see myself apping for MAYBE 1 card a year, if that.

 

Would my AAoA be gowing, or shrinking, using that example, of closing 10 cards now, potentially adding 1 card a year and closing 1 card a year?  

 

I've never been good at math and averages and all that jazz!  

I've got some cards. Some are pretty, some are ugly. Some are more useful than others.
Message 1 of 8
7 REPLIES 7
Anonymous
Not applicable

Re: Question re: closing cards/AAoA

AAoA would continue to grow until 10 years hence when the tradelines fell off your report. By then your AAoA would still be strong because the open accounts would be 10 years older.

Message 2 of 8
toothgrind3r
Established Contributor

Re: Question re: closing cards/AAoA

Thanks.

So also, in theory, closing my oldest account (from 2012) wouldn't really be that bad of a thing to do then?  Cuz that's technically still there until 2022, which, by then, we'll all have jetpacks and I wont care about my AAoA anymore!

 

But no, in all seriousness, in the next 10 years I will have bought a house, car, etc...so wether or not I have these accounts open or closed doesn't really make any dfference at all, right?  The only thing I wouldn't want to do, if I plan on buying a house/car/etc, is continue to open 10 cards a year and/or max these guys out.

I've got some cards. Some are pretty, some are ugly. Some are more useful than others.
Message 3 of 8
Anonymous
Not applicable

Re: Question re: closing cards/AAoA

You are correct about closed accounts factoring into AAoA: http://ficoforums.myfico.com/t5/Credit-Cards/Closing-Credit-Cards/td-p/347190

 

The calculation includes not only revolving accounts, but also includes loans; basically, all your TLs.

 

The calculation is that you add up all the months that the accounts have been open, and divide by the number of accounts.  Closing cards simply stops those accounts from getting older, which means that your AAoA won't increase from those accounts (until they fall off your report, which is when your AAoA would suddenly decrease).

 

When you open new accounts, your AAoA decreases.

 

Unless there is some reason to close those cards (because of an AF, for example), then I would not close them.    Every month they are on your account, they help increase the AAoA.

 

Perhaps, think of it this way:  you have a "pool" of months that you must split evenly to each of your accounts.  Every month an account is open, it adds another month to the pool.  However, if you close it, you don't take it's months out of the pool, but you don't get new months in the pool.  And you still have to "feed" the account evenly from the pool.

 

EDIT:  I was incorrect on how closed accounts are calculated.  FICO simply looks at the opening date, and doesn't care about the closing date.

Message 4 of 8
toothgrind3r
Established Contributor

Re: Question re: closing cards/AAoA


@Anonymous wrote:

You are correct about closed accounts factoring into AAoA: http://ficoforums.myfico.com/t5/Credit-Cards/Closing-Credit-Cards/td-p/347190

 

The calculation includes not only revolving accounts, but also includes loans; basically, all your TLs.

 

The calculation is that you add up all the months that the accounts have been open, and divide by the number of accounts.  Closing cards simply stops those accounts from getting older, which means that your AAoA won't increase from those accounts (until they fall off your report, which is when your AAoA would suddenly decrease).

 

When you open new accounts, your AAoA decreases.

 

Unless there is some reason to close those cards (because of an AF, for example), then I would not close them.    Every month they are on your account, they help increase the AAoA.

 

Perhaps, think of it this way:  you have a "pool" of months that you must split evenly to each of your accounts.  Every month an account is open, it adds another month to the pool.  However, if you close it, you don't take it's months out of the pool, but you don't get new months in the pool.  And you still have to "feed" the account evenly from the pool.


Thank you!

I totally understand and get the "if they don't hurt, leave them open" thing...but I've already decided I don't like keeping track of that many accounts.  It just makes me nervous, gives me a little stress I'd rather not deal with.

 

But if I go from 15 cards down to 5 cards right now...in 10 years when those 10 cards I close fall off my report, my AAoA would still be practically the same because the 5 cards that are still open were all opened around the same time, correct?  

Of course, and I understand, that would change if I do, in fact, open 1 card a year, like in the example.

 

But, I'm just thinking out loud.  I understand more clearly now!

I've got some cards. Some are pretty, some are ugly. Some are more useful than others.
Message 5 of 8
Anonymous
Not applicable

Re: Question re: closing cards/AAoA


@toothgrind3r wrote:

@Anonymous wrote:

You are correct about closed accounts factoring into AAoA: http://ficoforums.myfico.com/t5/Credit-Cards/Closing-Credit-Cards/td-p/347190

 

The calculation includes not only revolving accounts, but also includes loans; basically, all your TLs.

 

The calculation is that you add up all the months that the accounts have been open, and divide by the number of accounts.  Closing cards simply stops those accounts from getting older, which means that your AAoA won't increase from those accounts (until they fall off your report, which is when your AAoA would suddenly decrease).

 

When you open new accounts, your AAoA decreases.

 

Unless there is some reason to close those cards (because of an AF, for example), then I would not close them.    Every month they are on your account, they help increase the AAoA.

 

Perhaps, think of it this way:  you have a "pool" of months that you must split evenly to each of your accounts.  Every month an account is open, it adds another month to the pool.  However, if you close it, you don't take it's months out of the pool, but you don't get new months in the pool.  And you still have to "feed" the account evenly from the pool.


Thank you!

I totally understand and get the "if they don't hurt, leave them open" thing...but I've already decided I don't like keeping track of that many accounts.  It just makes me nervous, gives me a little stress I'd rather not deal with.

 

But if I go from 15 cards down to 5 cards right now...in 10 years when those 10 cards I close fall off my report, my AAoA would still be practically the same because the 5 cards that are still open were all opened around the same time, correct?  

Of course, and I understand, that would change if I do, in fact, open 1 card a year, like in the example.

 

But, I'm just thinking out loud.  I understand more clearly now!


I feel the same way. I recently closed my three oldest credit cards due, in part, to that reason. Plus I wasn't using them, and I think it's silly to hang on to cards I'm not going to use.

Message 6 of 8
toothgrind3r
Established Contributor

Re: Question re: closing cards/AAoA


@Anonymous wrote:

@toothgrind3r wrote:

@Anonymous wrote:

You are correct about closed accounts factoring into AAoA: http://ficoforums.myfico.com/t5/Credit-Cards/Closing-Credit-Cards/td-p/347190

 

The calculation includes not only revolving accounts, but also includes loans; basically, all your TLs.

 

The calculation is that you add up all the months that the accounts have been open, and divide by the number of accounts.  Closing cards simply stops those accounts from getting older, which means that your AAoA won't increase from those accounts (until they fall off your report, which is when your AAoA would suddenly decrease).

 

When you open new accounts, your AAoA decreases.

 

Unless there is some reason to close those cards (because of an AF, for example), then I would not close them.    Every month they are on your account, they help increase the AAoA.

 

Perhaps, think of it this way:  you have a "pool" of months that you must split evenly to each of your accounts.  Every month an account is open, it adds another month to the pool.  However, if you close it, you don't take it's months out of the pool, but you don't get new months in the pool.  And you still have to "feed" the account evenly from the pool.


Thank you!

I totally understand and get the "if they don't hurt, leave them open" thing...but I've already decided I don't like keeping track of that many accounts.  It just makes me nervous, gives me a little stress I'd rather not deal with.

 

But if I go from 15 cards down to 5 cards right now...in 10 years when those 10 cards I close fall off my report, my AAoA would still be practically the same because the 5 cards that are still open were all opened around the same time, correct?  

Of course, and I understand, that would change if I do, in fact, open 1 card a year, like in the example.

 

But, I'm just thinking out loud.  I understand more clearly now!


I feel the same way. I recently closed my three oldest credit cards due, in part, to that reason. Plus I wasn't using them, and I think it's silly to hang on to cards I'm not going to use.


I saw that thread, that's what triggered this thread!  Because I've seen so many arguments for and against closing accounts....but it seems (and this seems to be my case) if you have aquired a few cards that you plan on having for a long time, and you don't plan on apping 10 time a year anymore, I feel the argument against closing accounts isn't as strong.  

I've got some cards. Some are pretty, some are ugly. Some are more useful than others.
Message 7 of 8
Anonymous
Not applicable

Re: Question re: closing cards/AAoA

but it seems (and this seems to be my case) if you have aquired a few cards that you plan on having for a long time, and you don't plan on apping 10 time a year anymore, I feel the argument against closing accounts isn't as strong. <<<< YES Smiley Happy
Message 8 of 8
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