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Closing Aged Accounts.. Yes It Is Ok

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DaveSignal
Valued Contributor

Re: Closing Aged Accounts.. Yes It Is Ok

The opening post for this thread was a correct post about AAoA.  Your score dropped when you paid off the mortgage because there is also a FICO scoring area for "types of credit" and you lost a major type of credit in your mix of accounts by closing the mortgage account.   Nobody said that FICO seemed like a reasonable scoring method.  It's not broken, this is just how FICO works.  I think some of the reasons my score fluctuates are crazy too, but it is what it is and this what the lenders use.  

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Message 71 of 81
llecs
Moderator Emeritus

Re: Closing Aged Accounts.. Yes It Is Ok


@Anonymous wrote:
Explain why when I just payed off my mortgage that my FICO dropped according to my score alert

The only FICO product that offers a score alert is ScoreWatch. Is this were you saw the alert? If so, take the score alerts with a grain of salt. Any score change is a net change of one or many factors that changed the score. If it dropped, there could be other things that factored into the score change like balance increases, utililization changes, whether or not other accounts were added or removed, and so on. If you have other loans reporting, a change to $0 wouldn't likely do anything at all to your EQ FICO. Converely, you don't loose points for adding a $500k mortgage as an example (other than the new acct ding). Paying it off wouldn't do anything either.

Message 72 of 81
Anonymous
Not applicable

Re: Closing Aged Accounts.. Yes It Is Ok

I have scorewatch. Still it makes no sense because how can a paid off mortgage account ever be kept open?? I had a conventional mortgage? It would stand to reason that paying it off would raise your score.

Message 73 of 81
Anonymous
Not applicable

Re: Closing Aged Accounts.. Yes It Is Ok

I am getting the picture of this thread. Longer the accounts the better, drop off after 10 years once closed, and continue to count toward your average length EVEN after closed. I am still new to much of this an my oldest is only 3 years. Simple question but if I leave cards open those aren't taken off after 10 right?

 

D

Message 74 of 81
llecs
Moderator Emeritus

Re: Closing Aged Accounts.. Yes It Is Ok


@Anonymous wrote:

I am getting the picture of this thread. Longer the accounts the better, drop off after 10 years once closed, and continue to count toward your average length EVEN after closed. I am still new to much of this an my oldest is only 3 years. Simple question but if I leave cards open those aren't taken off after 10 right?

 

D


Right. It's not uncommon for those with older mortgages to have a length of credit history of 20-30-40 years.

Message 75 of 81
Anonymous
Not applicable

Re: Closing Aged Accounts.. Yes It Is Ok

@Anonymous wrote:

I am getting the picture of this thread. Longer the accounts the better, drop off after 10 years once closed, and continue to count toward your average length EVEN after closed. I am still new to much of this an my oldest is only 3 years. Simple question but if I leave cards open those aren't taken off after 10 right?

 

D


Right. It's not uncommon for those with older mortgages to have a length of credit history of 20-30-40 years.

 


 

Not just mortgages but revolving credit cards?

Message 76 of 81
Repo-ed
Senior Contributor

Re: Closing Aged Accounts.. Yes It Is Ok


@Anonymous wrote:
@Anonymous wrote:

I am getting the picture of this thread. Longer the accounts the better, drop off after 10 years once closed, and continue to count toward your average length EVEN after closed. I am still new to much of this an my oldest is only 3 years. Simple question but if I leave cards open those aren't taken off after 10 right?

 

D


Right. It's not uncommon for those with older mortgages to have a length of credit history of 20-30-40 years.

 


 

Not just mortgages but revolving credit cards?


Correct.  You leave the account open, it will report until you close it or die (or if they close it)

5/2012: 560 credit scores across the board
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Message 77 of 81
llecs
Moderator Emeritus

Re: Closing Aged Accounts.. Yes It Is Ok

My mortgage was an example, but ditto to the above, it can apply to any account if you are able to keep it open long enough.

Message 78 of 81
jayrock24
Regular Contributor

Re: Closing Aged Accounts.. Yes It Is Ok

im still clueless as to what to do about 2 new accounts i just opened they are 1 month and 2 months so are you saying that its ok to close the new account as long as it is under 12 months whats the diff between 12 months and 1 month old accounts                                                                                                                                                                                                                                              

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Message 79 of 81
llecs
Moderator Emeritus

Re: Closing Aged Accounts.. Yes It Is Ok


@jayrock24 wrote:

im still clueless as to what to do about 2 new accounts i just opened they are 1 month and 2 months so are you saying that its ok to close the new account as long as it is under 12 months whats the diff between 12 months and 1 month old accounts                                                                                                                                                                                                                                              


No...they still factor into your age whether you close them at 5 months or 5 years. You've already been dinged for the new credit account and that'll go away with time. If you want the accounts just keep them open and the new account ding will disappear within a year usually.

Message 80 of 81
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