Closing revolving credit accounts in good standing...

[Anonymous]

Is it really bad for your FICO score to:

a) Open a 0% revolving credit line.
b) Pay it off in one year, on time.
c) Close the account immediately after paying it off.



I have numerous revolving credit lines, many of them I did the above. Others, are still open (including the first CC I ever got), and I pay the balances in full each month to get the rewards.

Is it better to leave all my revolving accounts open forever, or just keep 2 or 3 open for rewards? How does the opening and closing of revolving accounts impact your FICO score, assuming they always have been and will always remain in good standing?

Thanks!

[Anonymous]

payed off accounts help your score for length of credit FICO component.  SO do no close them.  Use them maybe once per year and no higher than 9% util.  Everytime you open a new account, an inquiry goes on your report which lowers your score, so don't open new credit if you do not need it.

[Anonymous]

An account that is closed will age for 10 years past the closure, helping your average age, but at 10 years it drops off your report. At that point it can lower your average age if you have newer accounts on your account that now have more of a say in your average age. If you kept the same revolvers and rarely opened new accounts your average age would keep increasing and your score potential would as well.

Many people like to keep cards active by using them once every 3 months or by automatically charging a small recurring bill to them. They then often pay the bill in full before the statement cuts, to prevent the card from showing a balance.

[Anonymous]

Yea when they talk about closing accounts mostly the effect that you will loose benefit of is 10 years down the road when it falls off with out a trace and all that age and history is gone with it. So people like to keep them open.

Since it sounds like you close and reopen a new one the credit line loss is not an issue since it seems that you replace it with a new one.

But getting new cards will keep lowering your avg age of your file and that drops your score.

And the inqs add up dropping your score too.

But if you are saving money for it, keep doing it. If your score drops below 710 it might be time to stop doing that since you're probably doing too much damage to age.

As for your oldest cards never cancel them even if you don't use them as they are mostly the reason your score is higher. And they will keep doing what they are doing for years to come unless you cancel one and then in 10 more years it falls off.

When your avg age is old enough it really doesn't matter too much what you do, however you can be denied for a loan based on number of new accounts and inqs with in 12 months.