Re: Do I have too many credit cards?
06-21-2012 10:30 AM
Closing young accounts will eventually lead to an increased age of accounts - but not for a very long time.
Open and closed accounts are both factored into AAoA. When an account in good standing is closed, it remains on one's credit report for as much as 10 years.
So, if you have 4 credit cards that are 10 years old and 4 credit cards that are 1 month old, your AAoA would be 5 years. If you close those 4 young credit cards today, your AAoA will still be 5 years. In a year, the AAoA will be 6 years.
After 10 years, assuming you don't open any new credit accounts, the 4 closed credit card accounts will fall off. The AAoA will go from 15 years to 20 years with the disappearance of those previously closed "young" accounts. But at 10 years, they wouldn't be young any more, and the overall effect of improvement of AAoA probably wouldn't make much of a difference in FICO scores.
Yes, that is what I thought. I think there is a simple miscommunication or misunderstanding here...