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New Member
Posts: 2
Registered: ‎05-18-2008
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How will closing my 6yr old (only) inactive account affect my credit score?

[ Edited ]

I have an inactive credit card that was 60days late payment about 6yrs ago(Aug 2006) , its the only -ve on my a/c. I plan on getting myself preapproved for a Mortgage loan, so was speculating on closing this a/c .However my score is barely above 780 so worried if that will pull down my score. The credit card limit on that a/c is barely $500/- Just wanted to know by how many points will my points drop? Or do you suggest I just leave it as is. 

 

Thanks.

 

Moderator Emeritus
Posts: 32,869
Registered: ‎08-04-2007
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Re: How will closing my 6yr old (only) inactive account affect my credit score?

Why do you want to close it? How soon do you want to try for a mortgage?

New Member
Posts: 2
Registered: ‎05-18-2008
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Re: How will closing my 6yr old (only) inactive account affect my credit score?

I want to apply for a preapproval in this coming week. Although my credir score seems good, I was wondering if Lenders will have an issue with that 1 -ve on my account when sanctioning me a mortgage, also will they be conservative in approving my loan amount?

Moderator Emeritus
Posts: 32,869
Registered: ‎08-04-2007
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Re: How will closing my 6yr old (only) inactive account affect my credit score?

I would leave it. There are a lot of assumptions here.  

 

Assuming they automatically didn't close it by now, closing it wouldn't make the account, payment history, or status go away. It'll still remain.

 

Assuming that the card is still reporting as open, has a $0 balance, and is still updating monthly, then closing mean FICO will still score the past history, impact to your mix of credit, etc.

 

Assuming the card had updated within the past few months and has a $0 balance, the only impact by closing it would be a potential increase in your overall CC util. FICO will ignore the balance and CL for util purposes once closed, so if you are carrying any balances on your other CCs, then that would increase your overall util and potentially drop your FICO.

 

Assuming it hasn't updated in a very long time, then there shouldn't be any negative impact on FICO if closed. There wouldn't be any positive impact by doing so.

 

I'll take a different tact here....I'd argue that if you initiate a request to close the CC there's potentially a moderate risk of the creditor initiating an internal dispute and deleting the entire account off your CR. Assuming you have zero lates or negative accounts reporting aside from this, any gain would be very small, if at all. A 6-yo 60-day late is relatively minor in damage by this point. I've had some 7-yo  60 days removed on a clean report and had no positive FICO impact. YMMV on your overall credit. If they did delete it can have a negative impact on your FICO if this CC were your oldest revolving or among your oldest accounts.

 

All of the above is on a FICO standpoint. Per FICO, I wouldn't touch it.

 

Per a lender review, they won't care about a 60-day late from 6 years ago.  There are plenty of lenders out there who wouldn't even look twice. 

Established Contributor
Posts: 760
Registered: ‎02-11-2012
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Re: How will closing my 6yr old (only) inactive account affect my credit score?

Most bankers will not worry or be concerned about a late payment with a six year bday. Ditto, to get rid of your longest positive trade could hurt you.

Starting scores 01/02/2012 EQ 707(Fico) TU 733(Fico) EXP 735 (FAKO)
Updated scores 06/01/2014 EQ 797(Fico) TU 768(Fico) EXP 769 (Fico), EQ 849 (Next Gen 5/27/14 Penfed)


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