topic Re: How much would my credit score be negatively impacted by closing my oldest account? in Understanding FICO® Scoring

How much would my credit score be negatively impacted by closing my oldest account?

cws-21 — Fri, 19 Feb 2021 14:12:28 GMT

I think I probably already have a good idea, but I was hoping you good folks could provide me with your best informed guess as to how much my credit score would be negatively impacted by closing my oldest account. I have provided my credit cards below along with the year they were opened and I can provide the exact month if that would be useful.

There are a few things you should know. First, I have approached credit cards differently than many in these forums. Over the years, I have applied for credit cards that would benefit me and closed credit cards that no longer did regardless of the consequences. I currently have a credit score between 821 and 833. I understand that, if I closed my oldest account, that it would stay on my credit history for 10 years. I also realize that my credit score would be negatively impacted in 10 years because my AAoA would have decreased from what it would have been. My utilization would not really be a problem given the card that I would be canceling has my lowest limit ($1,800), which it has been at for over a decade. Given all the above and below, and with the understanding that this is not an exact science, how much would my credit score be negatively impacted by closing my OAFCU Platinum Credit Card (opened 2001; $1,800 credit limit)? As always, I very much appreciate the replies, information, insights, recommendations, and the like.

~~OAFCU Platinum Credit: 2001~~ ?

American Express Blue Cash Preferred: 2014

Citi Double Cash: 2018

Wells Fargo Propel AMEX: 2019

First Bankcard Rewards Signature (Ducks Unlimited): 2019

Chase Amazon Card: 2019

Target RedCard Credit Card: 2021

Re: How much would my credit score be negatively impacted by closing my oldest account?

OmarR — Fri, 19 Feb 2021 14:38:04 GMT

Someone else is going to ask, so I might as well be the one.

Any particular reason why you want to close it? Annual fee? Or just because? (Which is your absolute right)

Re: How much would my credit score be negatively impacted by closing my oldest account?

JeffMO — Fri, 19 Feb 2021 14:44:04 GMT

In my opinion it shouldn't change at all providing it isn't a huge hit to utilization which you already stated isn't much. If it doesn't serve your needs, close it I closed my credit one card and never took a hit.

Enjoy

Re: How much would my credit score be negatively impacted by closing my oldest account?

thornback — Fri, 19 Feb 2021 15:10:28 GMT

@JeffMO wrote:
In my opinion it shouldn't change at all providing it isn't a huge hit to utilization which you already stated isn't much. If it doesn't serve your needs, close it I closed my credit one card and never took a hit.

Enjoy

There is no immediate impact on scores because closed accounts continue to age and be factored into your age of accounts for as long as they remain on your reports (~10 years after the date of closure). However, the loss in age once the account is finally removed down the road can, indeed, negatively affect scoring due to reduced AAoA - tho I haven't done the math in how much aaoa would change in this particular case.

Also the age of the oldest account (AoOA) is also a scorecard segmentation factor. Losing a card thats nearly 20 years older than all others can have a negative impact, in addition to the potential impact from reduced AAoA.

That said - the other cards will be 10+ years old at that point so a re-segmentation may not occur in this case.

@Anonymous - can you chime in here please? - i think i recall reading that once AoOA reaches 10 years, there is no additional segmentation from aging beyond that point- is that right?

Re: How much would my credit score be negatively impacted by closing my oldest account?

cws-21 — Fri, 19 Feb 2021 15:03:11 GMT

@OmarR wrote:
Any particular reason why you want to close it? Annual fee? Or just because? (Which is your absolute right)

@OmarR, thanks for the reply. There is no annual fee, but it is another account to check regularly and it isn't doing much for me. I try to simplify my life anywhere and everwhere I can so I can focus my time and energy on those people, activities, hobbies, etc. bringing value and meaning to my life (like being on myFICO!). I know that it doesn't take much time to periodically check my account for this particular credit card, monitor it for possible fraud, and to remember to make small purchases every once in awhile, but it is time that I could better use elsewhere.

Re: How much would my credit score be negatively impacted by closing my oldest account?

cws-21 — Fri, 19 Feb 2021 15:10:12 GMT

@thornback wrote:
@JeffMO wrote:
In my opinion it shouldn't change at all providing it isn't a huge hit to utilization which you already stated isn't much. If it doesn't serve your needs, close it I closed my credit one card and never took a hit.

Enjoy
There is no immediate impact on scores because closed accounts continue to age and be factored into your age of accounts for as long as they remain on your reports (~10 years after the date of closure). However, the loss in age once the account is finally removed down the road can, indeed, negatively affect scoring due to reduced AAoA - tho I haven't done the math in how much aaoa would change in this particular case.

Also the age of the oldest account (AoOA) is also a scorecard segmentation factor. Losing a card thats nearly 20 years older than all others can have a negative impact, in addition to the potential impact from reduced AAoA.

That said - the other cards will be 10+ years old at that point so a re-segmentation may not occur in this case.

@Anonymous - can you chime in here please? - i think i recall reading that once AoOA reaches 10 years, there is no additional score gain from aging beyond that point- is that right?

@JeffMO, thank you for the reply. @thornback, thanks for responding. I really appreciate the information and hope others can chime in. I understand that there will be a negative impact on my credit score in 10 years, for the reasons that you mentioned, I just don't know how much of an impact it will be. I also realize that there are a lot of unknown variables that will play a role between now and then such as whether or not I keep the cards that I currently have and/or apply for new cards. I am just hoping for some informed opinions on what I can likely expect.

Re: How much would my credit score be negatively impacted by closing my oldest account?

Anonymous — Fri, 19 Feb 2021 15:14:40 GMT

Not enough information provided to say really.

You'd have to project your age of accounts changes 10 years from now... So basically if that card is 20 years old now, in 10 years when it's expected to fall off after closure what would your AoOA drop from? If it's from 30 years to something 20+ years, you'd be in a similar place to where you are now. Also keep in mind that eliminating an old revolver will not only drop your AAoA when it comes off your report, but also your AAoRA, which some believe may be more important than AAoA.

Ultimately the decision is yours, OP, but I would definitely take a look at the numbers and work out the math before closing the account. You also have to consider your own credit habits and project what they may be over the next decade. If you're the type of person that opens a card every year or two and thus may have 5-10 more revolvers on your CR at that time it could impact your numbers differently than if you hardly ever open new accounts.

Re: How much would my credit score be negatively impacted by closing my oldest account?

Anonymous — Fri, 19 Feb 2021 15:24:46 GMT

And another important thing to remember about consequences 10 years away, we have no idea about how the then-current scoring system will work. While some things will presumably be similar (lates and chargeoffs are unlikely to be rewarded!) things like age and mix of credit could change in importance, and more significant changes (such as the trending added to FICO 10) could happen

Re: How much would my credit score be negatively impacted by closing my oldest account?

cws-21 — Fri, 19 Feb 2021 15:33:48 GMT

@Anonymous & @Anonymous, I appreciate your responses. I knew this was a complex and complicated issue, but I was hoping there may be some sort of generalities that could be made. Is that not the case? Would the best balance of information at this point in time indicate a possible or likely 10 point reduction in 10 years? 50 point reduction? As I previously mentioned, I understand that there are many unknown factors, but I always prefer to make informed decisions. However, I don't believe that I am informed enough to make this decision.

Re: How much would my credit score be negatively impacted by closing my oldest account?

wingennis — Fri, 19 Feb 2021 15:47:37 GMT

@cws-21 wrote:

I think I probably already have a good idea, but I was hoping you good folks could provide me with your best informed guess as to how much my credit score would be negatively impacted by closing my oldest account. I have provided my credit cards below along with the year they were opened and I can provide the exact month if that would be useful.

There are a few things you should know. First, I have approached credit cards differently than many in these forums. Over the years, I have applied for credit cards that would benefit me and closed credit cards that no longer did regardless of the consequences. I currently have a credit score between 821 and 833. I understand that, if I closed my oldest account, that it would stay on my credit history for 10 years. I also realize that my credit score would be negatively impacted in 10 years because my AAoA would have decreased from what it would have been. My utilization would not really be a problem given the card that I would be canceling has my lowest limit ($1,800), which it has been at for over a decade. Given all the above and below, and with the understanding that this is not an exact science, how much would my credit score be negatively impacted by closing my OAFCU Platinum Credit Card (opened 2001; $1,800 credit limit)? As always, I very much appreciate the replies, information, insights, recommendations, and the like.

~~OAFCU Platinum Credit: 2001~~ ?
American Express Blue Cash Preferred: 2014
Citi Double Cash: 2018
Wells Fargo Propel AMEX: 2019
First Bankcard Rewards Signature (Ducks Unlimited): 2019
Chase Amazon Card: 2019
Target RedCard Credit Card: 2021

I do this, too. My good credit score is supposed to work for me. If a card no longer benefits me, I shouldn't have to maintain it in order to polish my credit score. My oldest account from 1998 just fell off my EQ report last year. My next oldest that remained was 2005 I lost <10 points IRC.

Re: How much would my credit score be negatively impacted by closing my oldest account?

Anonymous — Fri, 19 Feb 2021 16:23:40 GMT

@cws-21 wrote:
@Anonymous & @Anonymous, I appreciate your responses. I knew this was a complex and complicated issue, but I was hoping there may be some sort of generalities that could be made. Is that not the case? Would the best balance of information at this point in time indicate a possible or likely 10 point reduction in 10 years? 50 point reduction? As I previously mentioned, I understand that there are many unknown factors, but I always prefer to make informed decisions. However, I don't believe that I am informed enough to make this decision.

Again, too difficult to guess. Probably between 10 and 50 points depending on model, but there's no way to know what your report will look like at that time. If your only revolvers are listed in your first post and you and your next oldest after the 20 year one is only 7 years old, that's a drastic change. Going from a 30 year to a 17 year AoORA a decade from now IMO wouldn't be a great thing and of course that will lower your AAoRA as well. I personally would suggest keeping it open. You could just sock drawer it and use it for gas once every 6-12 months or something to keep it alive. Not sure what sort of protection they have on the card, but if you can set an alert to let you know any time it is used you'd be aware of any fraud. Just my opinions.

Re: How much would my credit score be negatively impacted by closing my oldest account?

Anonymous — Fri, 19 Feb 2021 16:42:11 GMT

@Anonymous wrote:
@cws-21 wrote:
@Anonymous & @Anonymous, I appreciate your responses. I knew this was a complex and complicated issue, but I was hoping there may be some sort of generalities that could be made. Is that not the case? Would the best balance of information at this point in time indicate a possible or likely 10 point reduction in 10 years? 50 point reduction? As I previously mentioned, I understand that there are many unknown factors, but I always prefer to make informed decisions. However, I don't believe that I am informed enough to make this decision.
Again, too difficult to guess. Probably between 10 and 50 points depending on model, but there's no way to know what your report will look like at that time. If your only revolvers are listed in your first post and you and your next oldest after the 20 year one is only 7 years old, that's a drastic change. Going from a 30 year to a 17 year AoORA a decade from now IMO wouldn't be a great thing and of course that will lower your AAoRA as well. I personally would suggest keeping it open. You could just sock drawer it and use it for gas once every 6-12 months or something to keep it alive. Not sure what sort of protection they have on the card, but if you can set an alert to let you know any time it is used you'd be aware of any fraud. Just my opinions.

I would come to a different conclusion, depending on how much "irritation" keeping that card is (I have usually closed unneeded cards as well) Your credit scores are high enough to take a drop, if that will really happen many years from now. So, even if the card drops off early (which sometimes happens) a 50 point drop would still be fine. So, given we cannot provide anything like an accurate prediction, but it *probably* won't be a disaster given your current scores, if you want to close, do so.

Re: How much would my credit score be negatively impacted by closing my oldest account?

Anonymous — Fri, 19 Feb 2021 18:54:51 GMT

@thornback wrote:
@JeffMO wrote:
In my opinion it shouldn't change at all providing it isn't a huge hit to utilization which you already stated isn't much. If it doesn't serve your needs, close it I closed my credit one card and never took a hit.

Enjoy
There is no immediate impact on scores because closed accounts continue to age and be factored into your age of accounts for as long as they remain on your reports (~10 years after the date of closure). However, the loss in age once the account is finally removed down the road can, indeed, negatively affect scoring due to reduced AAoA - tho I haven't done the math in how much aaoa would change in this particular case.

Also the age of the oldest account (AoOA) is also a scorecard segmentation factor. Losing a card thats nearly 20 years older than all others can have a negative impact, in addition to the potential impact from reduced AAoA.

That said - the other cards will be 10+ years old at that point so a re-segmentation may not occur in this case.

@Anonymous - can you chime in here please? - i think i recall reading that once AoOA reaches 10 years, there is no additional segmentation from aging beyond that point- is that right?

Segmentation Thresholds for age of oldest account are at 2 years and 3 years. So that would not be an issue. Again, we don't know what scoring model will be in use years from now. As a matter of fact, we don't even know that it will stay on your credit report for 10 years.

It could disappear immediately, a year from now, in five years from now, or it could stay past 10 years. There's really no way to know. So you can't count on it being there for 10 years.

with that said, all of your other accounts are relatively new so you'll take a decent hit to age of oldest revolving account, average age of revolving accounts and average age of accounts.

As BBS said it could be 10 to 50 points, but by that time we don't know what your other ages will be and what other credit you activity you will have had. I would recommend keeping it open being your oldest card by far. In scoring, everything is biased towards Revolvers and having an old revolver is a tremendous advantage. Imho

Re: How much would my credit score be negatively impacted by closing my oldest account?

SouthJamaica — Fri, 19 Feb 2021 17:31:18 GMT

@cws-21 wrote:

I think I probably already have a good idea, but I was hoping you good folks could provide me with your best informed guess as to how much my credit score would be negatively impacted by closing my oldest account. I have provided my credit cards below along with the year they were opened and I can provide the exact month if that would be useful.

There are a few things you should know. First, I have approached credit cards differently than many in these forums. Over the years, I have applied for credit cards that would benefit me and closed credit cards that no longer did regardless of the consequences. I currently have a credit score between 821 and 833. I understand that, if I closed my oldest account, that it would stay on my credit history for 10 years. I also realize that my credit score would be negatively impacted in 10 years because my AAoA would have decreased from what it would have been. My utilization would not really be a problem given the card that I would be canceling has my lowest limit ($1,800), which it has been at for over a decade. Given all the above and below, and with the understanding that this is not an exact science, how much would my credit score be negatively impacted by closing my OAFCU Platinum Credit Card (opened 2001; $1,800 credit limit)? As always, I very much appreciate the replies, information, insights, recommendations, and the like.

~~OAFCU Platinum Credit: 2001~~ ?
American Express Blue Cash Preferred: 2014
Citi Double Cash: 2018
Wells Fargo Propel AMEX: 2019
First Bankcard Rewards Signature (Ducks Unlimited): 2019
Chase Amazon Card: 2019
Target RedCard Credit Card: 2021

I don't see why it would be affected at all.

Re: How much would my credit score be negatively impacted by closing my oldest account?

Anonymous — Fri, 19 Feb 2021 18:01:59 GMT

@SouthJamaica wrote:
I don't see why it would be affected at all.

I assume SJ is referring to right now, not 10 years from now.

Re: How much would my credit score be negatively impacted by closing my oldest account?

Anonymous — Fri, 19 Feb 2021 18:06:47 GMT

I was making the same assumption.

Re: How much would my credit score be negatively impacted by closing my oldest account?

SouthJamaica — Fri, 19 Feb 2021 18:53:10 GMT

@Anonymous wrote:
@SouthJamaica wrote:
I don't see why it would be affected at all.
I assume SJ is referring to right now, not 10 years from now.

Yes, I assumed OP was talking about "right now" because OP had already told us he was aware of the effect down the road: " I understand that, if I closed my oldest account, that it would stay on my credit history for 10 years. I also realize that my credit score would be negatively impacted in 10 years because my AAoA would have decreased from what it would have been."

Re: How much would my credit score be negatively impacted by closing my oldest account?

Anonymous — Fri, 19 Feb 2021 18:53:50 GMT

@Anonymous wrote:
I would come to a different conclusion, depending on how much "irritation" keeping that card is (I have usually closed unneeded cards as well) Your credit scores are high enough to take a drop, if that will really happen many years from now. So, even if the card drops off early (which sometimes happens) a 50 point drop would still be fine. So, given we cannot provide anything like an accurate prediction, but it *probably* won't be a disaster given your current scores, if you want to close, do so.

I don't disagree, but one would have to weigh how much "buffer" they want built into their Top Tier score. If X is the score where one can receive the best approvals/rates, technically anyone at X or (say) X+20 is "good to go" but such a profile can't absorb a spree or new accounts the way someone at X+50 can. I'm super conservative and when it comes to scores feel "more is more" but can understand how others may view it differently.

Re: How much would my credit score be negatively impacted by closing my oldest account?

cws-21 — Fri, 19 Feb 2021 18:57:02 GMT

@Anonymous wrote:
In scoring, everything is biased towards Revolvers and having an old revolver is a tremendous advantage. Imho

@Anonymous, thank you for your input. I would just like to clarify one point. You are saying that individuals significantly benefit from even having a single "old revolver," correct? If so, the benefit is beyond how it affects AAOA?

Re: How much would my credit score be negatively impacted by closing my oldest account?

Anonymous — Fri, 19 Feb 2021 19:02:04 GMT

@cws-21 wrote:
@Anonymous wrote:
In scoring, everything is biased towards Revolvers and having an old revolver is a tremendous advantage. Imho
@Anonymous, thank you for your input. I would just like to clarify one point. You are saying that individuals significantly benefit from even having a single "old revolver," correct? If so, the benefit is beyond how it affects AAOA?

@cws-21 yes, tremendously. The age of your oldest Revolving account is a major Scoring Factor it appears. The average age of your revolving accounts is also a major scoring factor. Removing that one very old account will bring your oldest revolving age and average revolving age down tremendously.

The combination of the score drop from those two metrics would concern me far more than any potential drop from average age of accounts, which really is overrated and not worth anywhere near as many points in my humble opinion.