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Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Closing Aged Accounts.. Yes It Is Ok

It has always been common knowledge that closing aged accounts will hurt your scores. I myself (and many others) have always believed that this due to one losing age now that the TL is closed. This in fact is not true.
 
Revolving utilization is the only area of scoring where closing an account can hurt you (at least in the short term). Closed accounts with a revolving balance is still counted against utilization; however, a closed account with a no balance would not be.
 
In terms of credit history, closed accounts are treated no differently than open accounts.  Meaning, the age on a closed account that let's say is 20 years old gets counted the same as an account that was closed six months ago.  In fact, the length of credit history gets counted for every TL on your report, regardless.
 
Keep in mind that closed accounts in good standing are generally removed from your credit report after 10 years, whereas an open account in good standing can remain indefinitely.
 
Lets recap... In the short term, the only harm by closing a revolving account is due to the utilization percentage you lose, while over the long term, a closed account will be removed from your credit file after 10 years, which could lower your score due to the loss of history.
 
Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007

Re: Closing Aged Accounts.. Yes It Is Ok

[ Edited ]
So then closing a new account does not help you regain an older average age of accounts either. It is then the total of all revolving accounts open and closed that make up the average age. Then there really is no advantage of closing a new account that is "older" than "12 months". And also no advantage of keeping it either. Either way once you have the account it effects the score the same open or closed provided it is at least 12 months or older. (not discussing accounts under 12 months old) :-)

And I am discussing average age only. Not credit lines, UTL, ect.

Message Edited by ilovepizza on 06-07-2007 09:31 PM
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Closing Aged Accounts.. Yes It Is Ok



ilovepizza wrote:
So then closing a new account does not help you regain an older average age of accounts either. It is then the total of all revolving accounts open and closed that make up the average age. Then there really is no advantage of closing a new account that is "older" than "12 months". And also no advantage of keeping it either. Either way once you have the account it effects the score the same open or closed provided it is at least 12 months or older. (not discussing accounts under 12 months old) :-)

And I am discussing average age only. Not credit lines, UTL, ect.

Message Edited by ilovepizza on 06-07-2007 09:31 PM

Correct!
Valued Member
Jay1987
Posts: 52
Registered: ‎04-27-2007

Re: Closing Aged Accounts.. Yes It Is Ok

Curious.
 
Did you find this out from personal experience, or did you read it somewhere?
Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Closing Aged Accounts.. Yes It Is Ok



Jay1987 wrote:
Curious.
 
Did you find this out from personal experience, or did you read it somewhere?



Let's just say it was a credible source. :smileyhappy:
Established Contributor
ObsessedwithmyFico
Posts: 513
Registered: ‎05-31-2007

Re: Closing Aged Accounts.. Yes It Is Ok

So you are saying it is ok to close those three CAP1 accounts with the annual fees once I obtain AMEX even if those are my oldest accounts (approx 5 years)?
Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Closing Aged Accounts.. Yes It Is Ok



ObsessedwithmyFico wrote:
So you are saying it is ok to close those three CAP1 accounts with the annual fees once I obtain AMEX even if those are my oldest accounts (approx 5 years)?



In terms of worrying about lost age, yes. But losing whatever util the cards are providing could hurt you.
Super Contributor
MidnightVoice
Posts: 8,158
Registered: ‎03-25-2007

Re: Closing Aged Accounts.. Yes It Is Ok

TU tells me I am a good boy because I have an established credit history AND an established revolving credit history
 
EX says that despite 20+ accounts, most of them over 10 years old, I have a short credit history.
 
The difference?  TU reports two open credit lines of 10+ years, EX reports only one.  All the other old accounts are the same.
 
Hmmmmmm
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Senior Contributor
smallfry
Posts: 4,831
Registered: ‎04-20-2007

Re: Closing Aged Accounts.. Yes It Is Ok



Tuscani wrote:


Jay1987 wrote:
Curious.
Did you find this out from personal experience, or did you read it somewhere?



Let's just say it was a credible source. :smileyhappy:



Gee. I wonder who? LOL. Thanks there is a lot of confusion out there amongst some very knowledgeable people on this subject. So to break it down you just add up all the accounts both open and closed. For the sake of discussion we can use months since opened not years. Then divide it by the number of accounts and there is your average age. All accounts are weighted equally? Car loans credit cards mortgage etc etc. Correct?
Senior Contributor
ilovepizza
Posts: 3,071
Registered: ‎05-17-2007

Re: Closing Aged Accounts.. Yes It Is Ok



smallfry wrote:


Tuscani wrote:


Jay1987 wrote:
Curious.
Did you find this out from personal experience, or did you read it somewhere?



Let's just say it was a credible source. :smileyhappy:



Gee. I wonder who? LOL. Thanks there is a lot of confusion out there amongst some very knowledgeable people on this subject. So to break it down you just add up all the accounts both open and closed. For the sake of discussion we can use months since opened not years. Then divide it by the number of accounts and there is your average age. All accounts are weighted equally? Car loans credit cards mortgage etc etc. Correct?


Accounts are broken in to groups. Revolving, Installments, ect. The average age of accounts refers to revolving when discussing credit cards, charge cards and retail cards. Installments are graded differently and do not count against average revolving age. :-)
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc

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