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Hey, guys.
I am a bit confused.
The OP of another thread asked whether he or she could close his or her Capital One account because it has an AF but fears that because it is very old in credit age, closing it may tank his or her scores.
It is my understanding that Fico considers closed accounts, but another poster on the thread said that some lenders do not even consider closed accounts.
Is this really true? If so, which lenders do not consider closed accounts?
@Anonymous wrote:Hey, guys.
I am a bit confused.
The OP of another thread asked whether he or she could close his or her Capital One account because it has an AF but fears that because it is very old in credit age, closing it may tank his or her scores.
It is my understanding that Fico considers closed accounts, but another poster on the thread said that some lenders do not even consider closed accounts.
Is this really true? If so, which lenders do not consider closed accounts?
You're conflating what lenders can/do look at with what the FICO formula uses; the two aren't always the same.
FICO will 'count' a close account as long as the credit bureau is still reporting it, which is usually up to 10 years for positive accounts.
Lenders are free to use FICO, their own in-house proprietary formula, some other formula, or any combination they please. Their analysts (and algorithms) are free to 'count' things however they want, although most take one of the various FICO models into consideration.
@UncleB wrote:
@Anonymous wrote:Hey, guys.
I am a bit confused.
The OP of another thread asked whether he or she could close his or her Capital One account because it has an AF but fears that because it is very old in credit age, closing it may tank his or her scores.
It is my understanding that Fico considers closed accounts, but another poster on the thread said that some lenders do not even consider closed accounts.
Is this really true? If so, which lenders do not consider closed accounts?
You're conflating what lenders can/do look at with what the FICO formula uses; the two aren't always the same.
FICO will 'count' a close account as long as the credit bureau is still reporting it, which is usually up to 10 years for positive accounts.
Lenders are free to use FICO, their own in-house proprietary formula, some other formula, or any combination they please. Their analysts (and algorithms) are free to 'count' things however they want, although most take one of the various FICO models into consideration.
That makes total sense. Thanks, UnlceB!
@UncleB wrote:
You're conflating what lenders can/do look at with what the FICO formula uses; the two aren't always the same.
FICO will 'count' a close account as long as the credit bureau is still reporting it, which is usually up to 10 years for positive accounts.
Lenders are free to use FICO, their own in-house proprietary formula, some other formula, or any combination they please. Their analysts (and algorithms) are free to 'count' things however they want, although most take one of the various FICO models into consideration.
+1 :
And depending on numbers in profile, it might help more if the lender does not consider closed accounts.
To add to the excellent answer UncleB offered, many/most basic credit approvals are granted/denied by a computer system with very little if any manual review and many/most of those use FICO scoring for the score factor (one of several factors in the process). Fico scoring uses closed accounts (as long as they are still showing on your CRA's reports) so in general or most cases closed accounts do count when the computer decides you are going to be friends.