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so, i have finally gotten all of my cards paid off leaving a balance on a couple just to keep utilization and paid off some installment loans. my score increased 135 points. amazing really. now the issue is the age of my accounts. i want to close the older crappy cards with the monthly fee and yearly fee however i'm not sure what that will do to my credit score. what is the ideal for age of open accounts? is it average age of open accounts? age of oldest account? the variables seem endless.
@ficoschmico wrote:so, i have finally gotten all of my cards paid off leaving a balance on a couple just to keep utilization and paid off some installment loans. my score increased 135 points. amazing really. now the issue is the age of my accounts. i want to close the older crappy cards with the monthly fee and yearly fee however i'm not sure what that will do to my credit score. what is the ideal for age of open accounts? is it average age of open accounts? age of oldest account? the variables seem endless.
1. don't think twice about closing anything with a monthly fee
2. don't think twice about closing anything with an annual fee which you don't like to use
3. average age of accounts (AAoA) and age of oldest account (OA) are two separate sub factors in "age"
4. if you close an account it stays in your report for 10 years, for purposes of both OA and AAoA... so there will be no effect to closing even your oldest card until 10 years down the road
5. since an ideal AAoA is 10 years or more, you'll be in good shape 10 years from now, even with closing all your subpar cards today
@ficoschmico wrote:
Thanks. So it doesn't matter if they are open or closed?
Not for 10 years.
Awesome respoinse by SJ.
I notice that you say that you paid off some of your installment loans. Bear in mind that you will take a score hit if you pay off all of the loans. If you want some guidance on the installment piece, let us know. You'll probably need to tell us the kind of loan, the interest rate, the original amount of the loan, the amount you currently owe on it, the term of the loan, and how much of that term you have yet on it. Example:
Car loan, 4%, original 24k, still owe 19k, 4 year loan, still have 3 years to go
To reiterate what SJ said, FICO makes no distinction in its age based factors between open vs. closed account. A closed account helps your age just as much as an open account. On top of that, the closed account continues to age. But, of course, eventually a closed account will fall of your credit report, typically ten years after it was closed, though it can happen earlier. When the account falls off, it will of course no longer be part of any AAoA or AOA calculations.
If one of the "junk" cards you are thinking about is also your OLDEST account, then things get more complicated as far as the best decision. If the account costs you nothing to keep open (no fees) then I would not cancel such a card. Otherwise, feel free to cancel stuff you don't care for.
@Anonymous wrote:Awesome respoinse by SJ.
I notice that you say that you paid off some of your installment loans. Bear in mind that you will take a score hit if you pay off all of the loans. If you want some guidance on the installment piece, let us know. You'll probably need to tell us the kind of loan, the interest rate, the original amount of the loan, the amount you currently owe on it, the term of the loan, and how much of that term you have yet on it. Example:
Car loan, 4%, original 24k, still owe 19k, 4 year loan, still have 3 years to go
To reiterate what SJ said, FICO makes no distinction in its age based factors between open vs. closed account. A closed account helps your age just as much as an open account. On top of that, the closed account continues to age. But, of course, eventually a closed account will fall of your credit report, typically ten years after it was closed, though it can happen earlier. When the account falls off, it will of course no longer be part of any AAoA or AOA calculations.
If one of the "junk" cards you are thinking about is also your OLDEST account, then things get more complicated as far as the best decision. If the account costs you nothing to keep open (no fees) then I would not cancel such a card. Otherwise, feel free to cancel stuff you don't care for.
Thanks, CGID.
While FICO continues to score closed accounts, creditors may decide to do their own housecleaning once you close an account in good-standing.
They may choose to simply delete the entire account, thus ending any need to do any review for possible updates, or to entertain any consumer disputes over information sitll being reported.
You have no control over decisions by a creditor to simply delete dead accounts, so closing does no assure that the account will contnue to be included in AAoA.