Understanding FICO® Scoring

[Susieq389]

I have to disagree with what you are saying.  I have experienced this first hand.  Several years ago I paid off all of my dept and decided I would close an account that I had not been using.  This account happened to be an account that I had opened back in the early 80's.  Immediately after doing this I was advised (within a month) by my car insurance company that my new renewal rate had increased by a couple hundred dollars because of a significant drop in my credit score.  I reached out to experian at the time and they advised me that this was because I closed the account that showed my longest credit history.   My advise is DON'T DO IT!  It has taken me a long time to try to repair this.

[haulingthescoreup]

It is true that you should try to hang onto your oldest account as long as possible, and this is repeated many, many places.

But it should have continued to report for ten years after closing. If it vanished immediately, something's wrong.

And Experian doesn't understand FICO scoring.

[jhtrico1850]

So if I close it now (10 months) instead of 13 months, 5 years from now, there's no difference? Also, what if I closed it 2 years from now?

[haulingthescoreup]

From whatever date you close it, add ten years. It should report until the ten years are up.

We have reliable info from members that Equifax drops accounts much earlier than that. They dumped one of mine that had been closed for about 4 1/2 years.

There is no law requiring that closed accounts report for 10 years. It's just custom.

[jhtrico1850]

This is a great scoop btw. Why don't we know more about it?

http://www.nytimes.com/2009/05/17/magazine/17credit-t.html?_r=1

And this of course... Even though it's not technically the FICO score per se...

http://www.fico.com/en/Products/DMApps/Pages/FICO-Transaction-Scores.aspx

It would be grea if there was a site that was more transparent in the scoring method.

[highstream]

So, taking what's been said in this thread, it appears that it pays to reopen at least some accounts that are nearing the 10-years-since-closing mark, since typically they will add to the average length of credit history.  Or are reopened accounts handled differently by FICO scoring?

[llecs]

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highstream wrote:

So, taking what's been said in this thread, it appears that it pays to reopen at least some accounts that are nearing the 10-years-since-closing mark, since typically they will add to the average length of credit history.  Or are reopened accounts handled differently by FICO scoring?

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Reopened accounts are treated as if they never closed. Now good luck reopening a 10 year old since-closed account. It would have to be the exact same account with the same account number that you had before. Creditors will usually tell you you'd have to reapply and that action would mean opening a new account, and not reopening the old.

[haulingthescoreup]

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llecs wrote:

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highstream wrote:

So, taking what's been said in this thread, it appears that it pays to reopen at least some accounts that are nearing the 10-years-since-closing mark, since typically they will add to the average length of credit history.  Or are reopened accounts handled differently by FICO scoring?

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Reopened accounts are treated as if they never closed. Now good luck reopening a 10 year old since-closed account. It would have to be the exact same account with the same account number that you had before. Creditors will usually tell you you'd have to reapply and that action would mean opening a new account, and not reopening the old.

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+1

I have never, ever heard of a lender willing to do this.

The closest you can get is the backdating trick with AmEx, with a new card picking up the opening year of the oldest.

[BaddebtKing]

I have read that JC Penny's has re-opened some OLD closed accounts, but that seems to be the exception.

[MagicShot]

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Tuscani wrote:

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masdeocho wrote:

OK, tell me if I've got this right:

Say I have a five-year old card.  I close it today.  Two years from today, does it count towards my history as a seven-year old card?  It's not frozen in time today when I close it as a five-year old? 

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Yes, it counts towards your history as a seven year old card. And the 10 yr clock for its removal begins on the date you closed it, not when it was opened.

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Is this Still true today as in meaning since the the Credit Card Law went into effect?