Is it time? Should I close my secured card???

[Anonymous]

So guys, I'm at a point in my credit life where I'm almost scared to make any moves but I do think its time to close the 1st card that got me where I am but Im quite literally petrified. Its a secured card with a $35 annual fee and $600 of mine that I could surely use. I have a couple  cards now and excellent credit but still dont have a long history. My average age is only 1.11 years with the secured being the longest at 2.6 years. I would rather close this one and open a Discover card in its place because Im sure Id get a great starting limit with that card. But Im scared of dropping my average age down a ton by closing my oldest card and opening a new card at the same time while my average age is still so low.  Im concerned because I will be buying a house in a 6-7 years so this is very important. I need a history and a great one at that so please.... I will give a breakdown of where Im at with open accounts .  Please just give me your honest thoughts! Thanks!

2.6 secured

2.2 cap/mc

1.11 cap/mc

1.11 sportsman/visa

1.11 potterybarn

1.4  amex

1.9 car loan

[expatCanuck]

Typically (tho not guaranteed), a closed account will remain on your record for 10 years, so closing it now should not impact your average age of accounts 6 or 7 years from now.

And even if it did drop immediately, your AAoA would only drop from 1.6 to 1.4 years -- so, in two months, you'd make up that lost time.

In 6 years, your AAoA would be 7.4 rather than 7.6 years.  There's no 7.5 year threshold that I'm aware of, and 7+ years is certainly respectable in the eyes of most any lender.  And even if you add a new Discover card now, in 6 years, those calculations won't change appreciably.

So, my recommendation would be to close the card, save the AF, and get your $600 back.

[Kforce]

1)   I would drop the CC that had an AF and was holding money hostage.

2)  The closed CC will stay on the books for 10years, so no damage to "Fico" for 10 years.

3)   If it was to fall from the books (has happened but should not),

       your CC AAoA is 1.6, without that card 1.4   (Not worth worrying about)

4)  With the time frame you are planning for the mortgage loan,

      your credit age and scores should be in good shape.

While I was typing  "expatCanuck -- was reading my mind and beat me to the post"

[Adkins]

Close the secured card, get your money back and apply with Discover! Congratulations on your rebuilding success so far!

[SOGGIE]

Not knowing the card's issuing bank,
1) Can this secured card graduate to unsecured?
2) If so, can you change this product to a rewards card with no annual fee?

EDIT: I see now. OpenSky. I agree with the others. I would close it immediately.

[expatCanuck]

---

@Kforce wrote:

1)   I would drop the CC that had an AF and was holding money hostage.

2)  The closed CC will stay on the books for 10years, so no damage to "Fico" for 10 years.

3)   If it was to fall from the books (has happened but should not),

       your CC AAoA is 1.6, without that card 1.4   (Not worth worrying about)

4)  With the time frame you are planning for the mortgage loan,

      your credit age and scores should be in good shape.

While I was typing  "expatCanuck -- was reading my mind and beat me to the post"

---

I'm guessing that we both opened Excel, pasted the numbers & had Excel do the math?

[Anonymous]

If the mortgage is really 6 or 7 years out, I wouldn't worry about that in determining any credit moves (well, don't be late or default of course!)

In that timeframe, too many things can change, including the FICO algorithm used for mortgages.   And, as others have said, the impact is small anyway.

[joltdude]

Also I presume you are going to try to sign up for Discovers Credit Scorecard and then try for a preapproval no?

Its a minor thing, but you could always app for the discover and then get rid of the secured cruft.... Or dump it now.... either way works...

Good luck =)

-J

[Hotcoals91]

I dont think that there is any shame in closing a secured card if it doesnt unsecure within 18 months. I am in a similar situation and am considering closing my discover secured if it doesnt unsecure on the 20th (the end of month 18).

[800who]

secured card with annual fee? That's the deal breaker right there... let her go