topic Re: Closing credit accounts in General Credit Topics

Closing credit accounts

Anonymous — Sat, 22 Jan 2022 15:25:42 GMT

I've been rebuilding my credit over the past few years, and I have an Indigo card and two Credit One cards that I'm considering closing the accounts because of the annual fee. I also really don't use them anymore because I have other cards now. I'm just wondering how badly closing them will affect my credit because they're my oldest credit card accounts. I'd appreciate any advice. Thank you.

Re: Closing credit accounts

DJRobbieD — Mon, 24 Jan 2022 14:42:01 GMT

~~You hit it on the head... closing these cards would impact your Age of Oldest Account (AoOA) and Average Age of Accounts (AAoA). What are the ages of the rest of your accounts?~~

Disregard, I was wrong

Re: Closing credit accounts

SouthJamaica — Sat, 22 Jan 2022 16:31:55 GMT

@Anonymous wrote:
I've been rebuilding my credit over the past few years, and I have an Indigo card and two Credit One cards that I'm considering closing the accounts because of the annual fee. I also really don't use them anymore because I have other cards now. I'm just wondering how badly closing them will affect my credit because they're my oldest credit card accounts. I'd appreciate any advice. Thank you.

It won't seriously affect you. My advice would be to get rid of them.

They will continue to be factored into your average age of accounts, and the oldest will continue to be your oldest account, until they drop off your reports, which will probably be many years down the road, most likely 10 years or so from now.

If you keep any of them, just keep one of them, perhaps the oldest, so your Age of Oldest Account won't change. And do try to get them to upgrade it, or waive the annual fee, or something. If the 3 accounts are close to each other in age, then it doesn't really matter which one you keep around as your oldest card, so it might as well be the least expensive or least annoying of the 3.

Re: Closing credit accounts

chiefone4u — Sat, 22 Jan 2022 16:27:35 GMT

@Anonymous wrote:
I've been rebuilding my credit over the past few years, and I have an Indigo card and two Credit One cards that I'm considering closing the accounts because of the annual fee. I also really don't use them anymore because I have other cards now. I'm just wondering how badly closing them will affect my credit because they're my oldest credit card accounts. I'd appreciate any advice. Thank you.

With the information provided, no definite answer can be given.

In general, accounts in good standing tend to continue remain on your reports for about 10 year's after they are closed... the fact the credit accounts aren't immediately deleted helps prevent score drop do to sudden change in AAoA and AoOA (creditkarma will show a huge drop, but their scores typically don't count in the real world).

The biggest score killer you'll see from closing the accounts are related to utilization.

However much debt you are currently carrying will remain, but your available credit will drop by the amounts of the closed accounts.

Any points lost because of this change will be returned when you reduce your utilization back to the levels they were prior to closing the accounts.

Some Fico scores could also take a hit if closing those accounts changes the matrix of number of cards reporting a balance, and/or drops total cards to fewer than three.

Best mortgage scores like to see no more than 1/3rd of cards report a balance.

While we all like to keep our scores as high as possible, Finances before Fico's is a good rule of thumb... closing a card with an annual fee that no longer benefits you makes good sense.

IF: you'll still have at least three cards after closing them -- close the cards

IF: closing the cards doesn't put you in a new teir of utilization (i.e. 68.9%, 48.9%, 28.9%, 8.9% -- going over each of those benchmarks can cost you points) -- close the cards

IF: your finances need the extra cash saved by not paying an annual fee -- forget everything above and CLOSE THE CARDS.

Hope this is helpful in your decision making.

Re: Closing credit accounts

Anonymous — Sat, 22 Jan 2022 16:34:27 GMT

The majority of the other credit accounts were opened within the past 2 years.

Re: Closing credit accounts

Anonymous — Sat, 22 Jan 2022 16:40:40 GMT

This is very helpful information. Thank you.
I will still have 3 cards after closing these. Im

at 34% utilization right now. The combined credit limit of these 3 cards is $2050 - not much. I recently just opened a new account with $3K limit so it should offset.

My finances don't necessarily need the extra cash, I just don't know if I should keep paying fees on cards that im not using.

Re: Closing credit accounts

Anonymous — Sat, 22 Jan 2022 16:45:05 GMT

@Anonymous wrote:
I've been rebuilding my credit over the past few years, and I have an Indigo card and two Credit One cards that I'm considering closing the accounts because of the annual fee. I also really don't use them anymore because I have other cards now. I'm just wondering how badly closing them will affect my credit because they're my oldest credit card accounts. I'd appreciate any advice. Thank you.

Real world question? Closed a Cap1 account that went back many years (had annual fee and bucketed 2001 believe). The lender left it on my report for over ten years after closure and when it was dropped my FICO Scores definitely took a hit and have not gained back the points lost.

Note however, sometimes you need to 'bite the bullet' and move on. As likely many have already read, some lenders leave a card holder bucketed for many reasons and that is it! In truth from my own experiences the score hit did not really hurt my credit seeking. It turned out to be more part of my game to hit the max FICO Scores than a real need for credit

Will say over time I have 'culled the herd' and rolled with any score hits as I did not want to pay annual fees and carry cards I had to manufacture spend for just to keep them active (personal preference).

Re: Closing credit accounts

tacpoly — Mon, 24 Jan 2022 05:09:27 GMT

Close the accounts -- you won't see a hit based on age until many years down the road as most will stay on your report for 10 years.

Establish credit card accounts that you will want to and can keep long term: cards whose limits will grow or you can product change to meet your needs. I've had a card for 30 years that has been product-changed multiple times. It's still a card I regularly use. Well, I only have 2 cc, 1 au, and 1 charge card, so all my cards get used. Scores in the top tier.

Re: Closing credit accounts

FireMedic1 — Mon, 24 Jan 2022 14:37:05 GMT

@DJRobbieD wrote:
You hit it on the head... closing these cards would impact your Age of Oldest Account (AoOA) and Average Age of Accounts (AAoA). What are the ages of the rest of your accounts?

@DJRobbieDI corrected you in another thread on the same topic basically. AoOA and AAoA's are not affected with closed cards. Open and closed accounts with FICO are considered into your score.

https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/SCORE-DROPPED-17-points/m-p/6478642#M194160

Re: Closing credit accounts

DJRobbieD — Mon, 24 Jan 2022 14:43:47 GMT

@FireMedic1 wrote:
@DJRobbieD wrote:
You hit it on the head... closing these cards would impact your Age of Oldest Account (AoOA) and Average Age of Accounts (AAoA). What are the ages of the rest of your accounts?
@DJRobbieDI corrected you in another thread on the same topic basically. AoOA and AAoA's are not affected with closed cards. Open and closed accounts with FICO are considered into your score.
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/SCORE-DROPPED-17-points/m-p/6478642#M194160

@FireMedic1 I didn't see your correction in the previous thread, plus my two responses were around the same time. I wasn't trying to spread misinformation, I legitimately didn't realize that closed accounts still impact your oldest/average age of accounts. I stand corrected and revised my posts.

Re: Closing credit accounts

FireMedic1 — Mon, 24 Jan 2022 15:02:27 GMT

@DJRobbieD wrote:
@FireMedic1 wrote:
@DJRobbieD wrote:
You hit it on the head... closing these cards would impact your Age of Oldest Account (AoOA) and Average Age of Accounts (AAoA). What are the ages of the rest of your accounts?
@DJRobbieDI corrected you in another thread on the same topic basically. AoOA and AAoA's are not affected with closed cards. Open and closed accounts with FICO are considered into your score.
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/SCORE-DROPPED-17-points/m-p/6478642#M194160
@FireMedic1 I didn't see your correction in the previous thread, plus my two responses were around the same time. I wasn't trying to spread misinformation, I legitimately didn't realize that closed accounts still impact your oldest/average age of accounts. I stand corrected and revised my posts.

@DJRobbieD No harm no foul. I made plenty of oops in the begining. Its all good. Were here to learn as we do each day.

Re: Closing credit accounts

DJRobbieD — Mon, 24 Jan 2022 17:32:12 GMT

@DJRobbieDI corrected you in another thread on the same topic basically. AoOA and AAoA's are not affected with closed cards. Open and closed accounts with FICO are considered into your score.
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/SCORE-DROPPED-17-points/m-p/6478642#M194160
@FireMedic1 I didn't see your correction in the previous thread, plus my two responses were around the same time. I wasn't trying to spread misinformation, I legitimately didn't realize that closed accounts still impact your oldest/average age of accounts. I stand corrected and revised my posts.
@DJRobbieD No harm no foul. I made plenty of oops in the begining. Its all good. Were here to learn as we do each day.

@FireMedic1 is it VantageScore that only considers active accounts in AAoA and AoOA? I'm looking my CreditKarma and that appears to be the case.

Re: Closing credit accounts

FireMedic1 — Mon, 24 Jan 2022 20:39:35 GMT

@DJRobbieD wrote:
@DJRobbieDI corrected you in another thread on the same topic basically. AoOA and AAoA's are not affected with closed cards. Open and closed accounts with FICO are considered into your score.
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/SCORE-DROPPED-17-points/m-p/6478642#M194160
@FireMedic1 I didn't see your correction in the previous thread, plus my two responses were around the same time. I wasn't trying to spread misinformation, I legitimately didn't realize that closed accounts still impact your oldest/average age of accounts. I stand corrected and revised my posts.
@DJRobbieD No harm no foul. I made plenty of oops in the begining. Its all good. Were here to learn as we do each day.
@FireMedic1 is it VantageScore that only considers active accounts in AAoA and AoOA? I'm looking my CreditKarma and that appears to be the case.

Yepper. Thats might be where you go it at.

Re: Closing credit accounts

FalconSteve — Wed, 26 Jan 2022 23:46:02 GMT

It depends on the exact formula, but if you have other accounts, this isn't likely to kill you. Personalyy, I would close each card one at a time in the order of when the annual fee is coming up (unless the bank will PC to a no annual fee card, then I would keep the card) and monitor Credit Karma and Experian (FICO8) each month as they report to make sure the trend is not uncomfortable.

Re: Closing credit accounts

Anonymous — Fri, 28 Jan 2022 12:02:31 GMT

I had 2 Capital ones and 2 Credit ones that I used to build my credit for roughly 1.5 years. All 4 cards had a $600 credit limit each and I could never get a CLI on them. My current scores are all now over 700. Applied with Amex and got a 2,000 CL and also applied with my CU which gave me 7,000 CL. So I closed all 4 on the spot at a 0 balance.

Re: Closing credit accounts

SouthJamaica — Fri, 28 Jan 2022 14:09:07 GMT

@Anonymous wrote:
This is very helpful information. Thank you.
I will still have 3 cards after closing these. Im
at 34% utilization right now. The combined credit limit of these 3 cards is $2050 - not much. I recently just opened a new account with $3K limit so it should offset.

My finances don't necessarily need the extra cash, I just don't know if I should keep paying fees on cards that im not using.

You definitely should not be paying fees on cards you're not using.