07-31-2013 11:38 PM
I've read that closing your oldest account like shorten the average length of your account thus lowering your credit score.... but is this the same if it's a credit card versus a student loan??
Student Loan - Opened 2004
1st Credit Card - Opened 2009
Will closing the credit card benefit or damage my score? 650 on CreditKarma
08-01-2013 07:20 AM
The credit card, being your revolving account, will have more of an impact than the student (installment loan). Keep the credit card account open. So use it each month & pay it off.
08-01-2013 11:28 AM
I'll also add that closed accounts still factor into your length of history and average age of accounts. So closing them won't impact your length of history in the interim. However, around 10 years from the date of closure/loan payoff they'll typically disappear from your reports and there could be an impact at that time.
08-01-2013 11:00 PM
Good to know.
Would this rule (CC debt > installment loan) be true if it was a mortgage. When does magnitude factor into this? Let's assume the credit card limit is 10,000 and the mortgage is for 50,000 or 500,000. Will the later take precedence in calculating the score?
08-02-2013 11:25 AM
Balance amount is very minor in relation to revolving util percentage. Even installment util is super minor. For example let's say you add $10k in debt on limits of $10k on your CCs. You'd take a major hit off the percentage (100%). Conversely, let's say you add $10k in CC debt on a combined limit of $100,000. The damage would be much, much less (very small impact). Revolving util is also scored apart from installment util. They are never combined. And that's a good thing. You won't get dinged in a big way by adding a $500k mortgage. FICO does have a separate scoring component that looks at balance amounts, but the impact from that is very minor in relation to the % util on revolving.
08-02-2013 01:25 PM