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fused
Posts: 16,373
Registered: ‎03-12-2007
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Re: Closing New Accounts



Tuscani wrote:


smallfry wrote:


Conc wrote:
Skiffy,
You say that the card will continue to report with 1 year of age if I close it now. Isn't this the point of closing it, so the age is no longer factored into the average age?



Closed and open accounts both are figured in the equation for your average age.


Correct. And the only area of scoring where closing an account can hurt you is in the revolving utilization calculations. While a closed revolving account with a balance is included in utilization, a closed account with a zero balance is not.
 
In the area of length of credit history, closed accounts are treated no differently than open accounts.  That is, the length of history on a closed acct still gets counted right along with the rest of the closed account's history.  In fact, the length of credit history gets counted for every trade line on your report, regardless.
 

So, the only harm by closing a revolving account is to the utilization percentage, while, in the long run, a closed account will be removed from your credit file after 10 years, which could lower your score at that time due to the loss of that history.



Message Edited by Tuscani on 06-29-2007 06:05 AM

So much for the idea of don't close credit cards unless they are costing you money.:smileyhappy:  I am glad you made this post, I tried to last night but I was exhausted and kept messing it up.  There is a lot of confusion on this subject.  Please sticky this thread!
Credit Profile -
FICO 08 Scores (11-08-2014): EQ 818, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1

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Tuscani
Posts: 6,182
Registered: ‎03-29-2007
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Re: Closing New Accounts



fused111 wrote:


Tuscani wrote:


smallfry wrote:


Conc wrote:
Skiffy,
You say that the card will continue to report with 1 year of age if I close it now. Isn't this the point of closing it, so the age is no longer factored into the average age?



Closed and open accounts both are figured in the equation for your average age.


Correct. And the only area of scoring where closing an account can hurt you is in the revolving utilization calculations. While a closed revolving account with a balance is included in utilization, a closed account with a zero balance is not.
 
In the area of length of credit history, closed accounts are treated no differently than open accounts.  That is, the length of history on a closed acct still gets counted right along with the rest of the closed account's history.  In fact, the length of credit history gets counted for every trade line on your report, regardless.
 

So, the only harm by closing a revolving account is to the utilization percentage, while, in the long run, a closed account will be removed from your credit file after 10 years, which could lower your score at that time due to the loss of that history.



Message Edited by Tuscani on 06-29-2007 06:05 AM

So much for the idea of don't close credit cards unless they are costing you money.:smileyhappy:  I am glad you made this post, I tried to last night but I was exhausted and kept messing it up.  There is a lot of confusion on this subject.  Please sticky this thread!


"So much for the idea of don't close credit cards unless they are costing you money"

Why do you say that?


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fused
Posts: 16,373
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Re: Closing New Accounts

Tuscani:
 
There are other reasons to close positive CC accounts other then they are costing you money.  Maybe some folks do so because they have trouble managing them or some of their oldest cards are starter cards and have little or no perks/rewards.  My concern is a lot of people think closing their CCs will cause their scores to plummet.  I am glad you explained in your post the possible effect on revolving utilization calculations when closing a CC, and how a positive closed CC TL is treated the same as an open one. 
Credit Profile -
FICO 08 Scores (11-08-2014): EQ 818, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1

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Tuscani
Posts: 6,182
Registered: ‎03-29-2007
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Re: Closing New Accounts



fused111 wrote:
Tuscani:
 
There are other reasons to close positive CC accounts other then they are costing you money.  Maybe some folks do so because they have trouble managing them or some of their oldest cards are starter cards and have little or no perks/rewards.  My concern is a lot of people think closing their CCs will cause their scores to plummet.  I am glad you explained in your post the possible effect on revolving utilization calculations when closing a CC, and how a positive closed CC TL is treated the same as an open one. 


Agreed.. my brain tends to focus on JUST the scoring aspect sometimes. :smileyhappy:
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smallfry
Posts: 4,831
Registered: ‎04-20-2007
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Re: Closing New Accounts

Bottom line is if they aren't costing you anything keep them open. If you can't trust yourself put them in a safe deposit box so you can't get to them. One day you'll be sorry for negatively impacting your history. How do you think the FICO high achievers get their 20 year plus history? Closing accounts? LOL.
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fused
Posts: 16,373
Registered: ‎03-12-2007
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Re: Closing New Accounts



smallfry wrote:
Bottom line is if they aren't costing you anything keep them open. If you can't trust yourself put them in a safe deposit box so you can't get to them. One day you'll be sorry for negatively impacting your history. How do you think the FICO high achievers get their 20 year plus history? Closing accounts? LOL.

No, bottom line is if you want to close a CC, make sure the balance is $0 and be sure there is no adverse effect to your revolving util%.  High achievers with 20 plus year histories are older folks, I imagine at least well in their 40's, with perfect or near perfect payment histories.  Doesn't matter if their accounts are open or closed, the point is they are postitive TLs. Remember all positive CC TLs are weighted the same rather they are open or closed.
Credit Profile -
FICO 08 Scores (11-08-2014): EQ 818, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1

Senior Contributor
smallfry
Posts: 4,831
Registered: ‎04-20-2007
0

Re: Closing New Accounts



fused111 wrote:


smallfry wrote:
Bottom line is if they aren't costing you anything keep them open. If you can't trust yourself put them in a safe deposit box so you can't get to them. One day you'll be sorry for negatively impacting your history. How do you think the FICO high achievers get their 20 year plus history? Closing accounts? LOL.

No, bottom line is if you want to close a CC, make sure the balance is $0 and be sure there is no adverse effect to your revolving util%. High achievers with 20 plus year histories are older folks, I imagine at least well in their 40's, with perfect or near perfect payment histories. Doesn't matter if their accounts are open or closed, the point is they are postitive TLs. Remember all positive CC TLs are weighted the same rather they are open or closed.



Older folks in their 40's? You are a young one aren't you? Bottom line is once you close them you have frozen them. If you keep your accounts open that don't cost and pay your bills by the time you reach near death (50 ya think? LOL) you can sleepwalk to 750.
Moderator Emeritus
fused
Posts: 16,373
Registered: ‎03-12-2007
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Re: Closing New Accounts



smallfry wrote:


fused111 wrote:


smallfry wrote:
Bottom line is if they aren't costing you anything keep them open. If you can't trust yourself put them in a safe deposit box so you can't get to them. One day you'll be sorry for negatively impacting your history. How do you think the FICO high achievers get their 20 year plus history? Closing accounts? LOL.

No, bottom line is if you want to close a CC, make sure the balance is $0 and be sure there is no adverse effect to your revolving util%. High achievers with 20 plus year histories are older folks, I imagine at least well in their 40's, with perfect or near perfect payment histories. Doesn't matter if their accounts are open or closed, the point is they are postitive TLs. Remember all positive CC TLs are weighted the same rather they are open or closed.



Older folks in their 40's? You are a young one aren't you? Bottom line is once you close them you have frozen them. If you keep your accounts open that don't cost and pay your bills by the time you reach near death (50 ya think? LOL) you can sleepwalk to 750.

Yes I said older at least in their late 40's or older, not old!  My point is you can have a score of 800+ with positive CC TLs RATHER THEY ARE OPENED OR CLOSED!!!!!!!!!!!!!!!!!!  Your accounts will not freeze they are positive.  CCCs can freeze if you misbehave or get hit with an FR but this off subject
Credit Profile -
FICO 08 Scores (11-08-2014): EQ 818, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1

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smallfry
Posts: 4,831
Registered: ‎04-20-2007
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Re: Closing New Accounts

If I have a credit card that I opened in 2002 and close it today it stays on my report until 2017. If I leave it open it ages indefinitely. Oh boy.
Moderator Emeritus
fused
Posts: 16,373
Registered: ‎03-12-2007
0

Re: Closing New Accounts



smallfry wrote:
If I have a credit card that I opened in 2002 and close it today it stays on my report until 2017. If I leave it open it ages indefinitely. Oh boy.

Yes, if open then indefinitely!
Credit Profile -
FICO 08 Scores (11-08-2014): EQ 818, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26+ years ~ AAoA: 12 years ~ Util: 1% ~ Inqs: EX 1


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