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Do closed accounts still age?

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BottomRanker
New Contributor

Do closed accounts still age?

I see and hear a lot of people saying that closing an account will hurt your credit score.  How?

 

The five factors in the credit score are:

1. Payment history

2. Credit utilization

3. Length of credit history

4. New accounts

5. Mix of account types

 

If closing a card truly hurts your credit score, it would imply that a closed account does not age.  Is that true?

Message 1 of 10
9 REPLIES 9
takeshi74
Senior Contributor

Re: Do closed accounts still age?


@BottomRanker wrote:

Do closed accounts still age?


Yes.

 


@BottomRanker wrote:

I see and hear a lot of people saying that closing an account will hurt your credit score.  How?


This thread is linked in the Helpful Threads sticky.  Keep in mind that AAoA isn't the only factor.

http://ficoforums.myfico.com/t5/Credit-Cards/Closing-Credit-Cards/m-p/347190?jump=true

 


@BottomRanker wrote:

If closing a card truly hurts your credit score, it would imply that a closed account does not age.


Incorrect assumption.  You've overlooking one of the factors you listed.  The link above explains.

 

Additionally, whether closing or not hurts depends on one's credit and how the changes all stack up.  It is possible for closing a card to hurt.  It's also possible for it to have a negligible effect.  It all depends on the specifics of the situation.

Message 2 of 10
Anonymous
Not applicable

Re: Do closed accounts still age?


@takeshi74 wrote:

@BottomRanker wrote:

Do closed accounts still age?


Yes.

 


Oh really? I thought I read somewhere it doesn't. Let me give an example to have a better idea.

 

I open up an account in June 2010 and close it June 2014. It is now June 2015. Is the account considered 4 years old or 5 years old? I thought it would be considered 4 (2010-2014) and they stay 4 years old until it falls off.

 

Thank you.

Message 3 of 10
GoldSorata
Established Contributor

Re: Do closed accounts still age?

FICO uses Average Age of Accounts as a factor in it's scoring, the age is from when it was opened until present. It doesn't matter whether that account is closed or open.

Message 4 of 10
nycfico
Regular Contributor

Re: Do closed accounts still age?

I have an account from Barclays that is 19 years old, but they closed it about five years ago, with an outstanding balance of about $10k at the time.  I had a bunch of lates on it, but they actually goodwilled them and now it is a clean line going back for those 19 years, and every month I pay about $80 towards an existing balance of about $5,000.

 

I'm not really sure if paying each month on time is helping me any longer and what the consequence would be if I paid it all off.  I'm coming into a big check soon and am trying to figure out what to pay down first...this is among my options.  The interest rate is only 4%, so not too bad overall.

 

If I had no other priorities (paying down a tax lien first and foremost), I would pay it off immediately regardless.  But given that the TL continues to grow in a perfect green line going back nearly 20 years, I am probably just going to keep paying it off slowly. 

Message 5 of 10
Anonymous
Not applicable

Re: Do closed accounts still age?

Good to know that they continue aging. I've been trying to decide if I want to close one of my secured cards. Utilization is not a concern. We'll be taking out a mortgage hopefully in the next 10-11 months, so I don't want to do anything to rock the boat too much.

Message 6 of 10
Revelate
Moderator Emeritus

Re: Do closed accounts still age?


@Anonymous wrote:

Good to know that they continue aging. I've been trying to decide if I want to close one of my secured cards. Utilization is not a concern. We'll be taking out a mortgage hopefully in the next 10-11 months, so I don't want to do anything to rock the boat too much.


I'd just let it ride especially if you have limited tradelines as your sig suggests.  Close after closing.




        
Message 7 of 10
Anonymous
Not applicable

Re: Do closed accounts still age?

Thanks for the suggestion. I can handle the AF another year if having the TL is going to be beneficial for getting the mortgage.

Message 8 of 10
Thomas_Thumb
Senior Contributor

Re: Do closed accounts still age?

Closing a card with zero balance usually does not have a negative impact on your score   ... Unless for example it had 3x the credit line limit of any of your other active cards and/or was was by far your oldest account. In that case your aggregate utilization % may go up quite a bit and your average age of account could drop. The shift in these factors (particularly utilization %) could negatively impact your credit score.

 

Note: I let a couple non value added credit card accounts go dormant -you just don't use them anymore after bringing the balance to zero. An inactive card at zero balance will age - atleast until the credit card issuer closes it due to inactivity.

 

Closing an account that has a positive balance is not recommended

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 9 of 10
NRB525
Super Contributor

Re: Do closed accounts still age?


@Thomas_Thumb wrote:

Closing a card with zero balance usually does not have a negative impact on your score   ... Unless for example it had 3x the credit line limit of any of your other active cards and/or was was by far your oldest account. In that case your aggregate utilization % may go up quite a bit and your average age of account could drop. The shift in these factors (particularly utilization %) could negatively impact your credit score.

 

Note: I let a couple non value added credit card accounts go dormant -you just don't use them anymore after bringing the balance to zero. An inactive card at zero balance will age - atleast until the credit card issuer closes it due to inactivity.

 

Closing an account that has a positive balance is not recommended


Except if the lender closes it for me, or I want to freeze favorable terms on a $20,546 balance with a balance chased $21,540 credit line Smiley Happy  [December 2009]

I've had something like 5 cards closed with balances of significant amounts, either by me or by the lender over the years since the credit crisis, including the card with a $20k balance, and my score is only impacted by the high utilization. Making payments on the closed cards to pay them off has not been an additional negative. It is simply another balance one owes, with a credit line that is no longer avialable to draw funds from. Other lenders may be slow to give you a loan with such high balances, but that's due to the high balances, not the closed accounts.

 

I've also closed two new accounts I opened in 2014, within literally a few months of opening, closed them in 2014. The accounts weren't good for the long term, so closed them and haven't regretted it.

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
Message 10 of 10
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