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@Anonymous wrote:That's what I thought.So as much as I want to close it, I should do my best to put it away and not worry about it?For how long? Forever?How long does it take before an account becomes inactive?
I'll add to the confusion. Open or closed, CC TLs age and are scored the same. I know this seems to be hard to believe but it's true.
@Anonymous wrote:
@Anonymous wrote:That's what I thought.So as much as I want to close it, I should do my best to put it away and not worry about it?For how long? Forever?How long does it take before an account becomes inactive?
Inactivity depends on the creditor. Crown Jewelers will close accounts for inactivity after 6 months. Store cards may wait for a couple of years before closing (some wait much longer). I know Amex has closed accounts for inactivity, but I don't know their typical timeframe.
I would keep the 1 Financial Bank card sockdrawered for at least a few years. When your second-oldest account gets close to double digits in age, then it won't matter so much if you cut 1FB loose. But with a relatively young group of accounts like you have now, you want to keep your oldest account age and your average age as high as possible. History (oldest age and average age) is the factor that takes the longest to replace.
The only thing you need to concern yourself with when closing a CC, short history or not, is the negative effect it could have on your cumulative Util% on your revolving accounts. There are two UTIL% calculations: one for each CC and a second one which is cumulative and calculates your total UTIL%. Both are very important.
Example:
Card 1: CL 5K, balance 1K = 20% util
Card 2: CL 3K, balance 800 = 27% util
Card 3: CL 2K, balance 100 = 5% util
Add all three together and cumulative UTIL% is 19%
Not bad but again not ideal. Let's see what happens if you close one of them.
Close Card 2:
Total CL is 10K - 3K = 7K total CL
Cumulative: 7K CL, balance 3K = 43%
Getting worse!
Closed and opened CC TLs are weighted and scored equally by FICO. You will not be punished by simply closing a CC as long as it has a $0 balance and has no derogs reporting with it and your cumulative Util% stays at 1-9%. You might to try and get CLIs on the cards you plan to keep open before you close the card you don't want. This will help you to lower both util%'s I hope this helps clear up the confusion.
GL to you and congrats on your excellent scores, however which way you go.
Matthew wrote:Yes, the confusion has been cleared up.Thank you to all who have helped, I feel like I understand how it works a lot better now.So for now, I will simply not use it, but make sure it doesn't become inactive, and pay it off in full when I do use it.