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When people ask about closing unused cards, I almost always argue against it, in part for the purposes of AAoA. I get pushback from others arguing that "the accounts will stay on your report and continue to help your AAoA for ten years." But my question is, "what happens after ten years?"
And being on the other side of ten years since cards have been closed, I can tell you, I was right. You shouldn't close cards.
In the first half of 2007, before I really started to pay attention, I let five cards be closed for non-use. Some had been open since 1983. I could have kept them alive by merely making a charge every year or so. But I figured, "I never use these cards, and I have plenty of other credit, why do I need them?," so they got closed. No sweat, they stay on my report anyway, right?
Until now. It's 2017, ten years after the accounts closed, so they've now fallen off.
With those accounts in my portfolio, my AAoA would be 8.5 years. With those accounts out of my portfolio, my AAoA is 6.5 years.
Is it the end of the world? No, my credit score is still fine. But it does drag it down, and every time I go to apply for a new card, I'm keenly aware of the amplified effect a new account has on my AAoA and score. Those new accounts wouldn't have nearly the same effect if those five cards (including some which would have 34 years of history) were still alive.
Ten years might seem like a long time in the future, as if something that will only affect you in ten years isn't to be concerned about. But unless you're 112 years old, it is.
Unless they charge an annual fee, keep those cards open. High limit, low limit, major cards, store cards, doesn't matter. They all help your AAoA.
Chris.
I haven't been declined for anything since my one card at the time was 4 months old. Worrying about 6.5 vs. 8.5 years seems odd to me.
I don't have any baddies and do light bonus chasing.
Edit: 1000th post!
@Anonymous wrote:When people ask about closing unused cards, I almost always argue against it, in part for the purposes of AAoA. I get pushback from others arguing that "the accounts will stay on your report and continue to help your AAoA for ten years." But my question is, "what happens after ten years?"
And being on the other side of ten years since cards have been closed, I can tell you, I was right. You shouldn't close cards.
In the first half of 2007, before I really started to pay attention, I let five cards be closed for non-use. Some had been open since 1983. I could have kept them alive by merely making a charge every year or so. But I figured, "I never use these cards, and I have plenty of other credit, why do I need them?," so they got closed. No sweat, they stay on my report anyway, right?
Until now. It's 2017, ten years after the accounts closed, so they've now fallen off.
With those accounts in my portfolio, my AAoA would be 8.5 years. With those accounts out of my portfolio, my AAoA is 6.5 years.
Is it the end of the world? No, my credit score is still fine. But it does drag it down, and every time I go to apply for a new card, I'm keenly aware of the amplified effect a new account has on my AAoA and score. Those new accounts wouldn't have nearly the same effect if those five cards (including some which would have 34 years of history) were still alive.
Ten years might seem like a long time in the future, as if something that will only affect you in ten years isn't to be concerned about. But unless you're 112 years old, it is.
Unless they charge an annual fee, keep those cards open. High limit, low limit, major cards, store cards, doesn't matter. They all help your AAoA.
Chris.
I agree with you.
It should also be pointed out that the "10 years" business isn't written in stone. I had 5 accounts which I closed within the past year disappear from my Equifax reports entirely a few months ago. One of them was a very old account which is now gone from my EQ report and has had a big impact on my EQ average age of accounts.
I closed 5 cards in January, including a Cap One Plat that was 10 years old. My AAOA took a dive, as did all three scores, each -25 to -30 points. Scores are climbing back up, but it's something to consider when closing an account. Lesson learned!
^^^ I closed 8 or 9 last year. I've decided not to do that anymore! All mine will be open till I'm dead or the lenders take them away! Lol
My AAoA took major hits when I opened a bunch of accounts in 2015. Now with all of these accounts reporting. My AAoA is low but like the man of steel!
A new account here or there has little to no affect on it. I have 46 accounts reporting now opened and close.
It would be too much babysitting for me. A card has to earn its keep...or at least share a login with a card that does (like BCE and ED haven't been getting any decent offers for a while, but are easy to manage when I'd have a Platinum, anyway).
I have more of a cash cushion than most, though...so some of you may want to keep your Barclaycard NFL and Rewards cards.
Having a large aaoa might be nice, if my goal was to have a 850 FICO score. But its not. I see no advantage/profit with 850 that I wouldn't see in 760+ scores.
I have good scores, and my aaoa is only over 2 years. Even so, my FICO 09 score from NFCU was 805 for some inexplicable reason. I want a good score so I can profit from it, and in my case that means obtaining signup bonuses, as well as whatever the latest cards are that give good rewards that I can use. I don't see the 850 score as a goal, since obtaining that would mean giving up other (profitable) goals.
Keeping a good number of cards active can be good for utilization ( I have over $400k in total limits). But closing cards gives the opportunity to combine limits, and to eventually qualify for more signup bonuses from the same creditors. Its also fewer cards that can be compromised, and I already get 1-2 cards compromised each year as it is.
So, I don't see a problem with closing a few cards each year. Especially since I open a few cards each year. As long as you keep a thick file, and large enough credit limits to pad utilization numbers, then everything else should be based on what your goals are.
@Themanwhocan wrote:Having a large aaoa might be nice, if my goal was to have a 850 FICO score. But its not. I see no advantage/profit with 850 that I wouldn't see in 760+ scores.
I have good scores, and my aaoa is only over 2 years. Even so, my FICO 09 score from NFCU was 805 for some inexplicable reason. I want a good score so I can profit from it, and in my case that means obtaining signup bonuses, as well as whatever the latest cards are that give good rewards that I can use. I don't see the 850 score as a goal, since obtaining that would mean giving up other (profitable) goals.
Keeping a good number of cards active can be good for utilization ( I have over $400k in total limits). But closing cards gives the opportunity to combine limits, and to eventually qualify for more signup bonuses from the same creditors. Its also fewer cards that can be compromised, and I already get 1-2 cards compromised each year as it is.
So, I don't see a problem with closing a few cards each year. Especially since I open a few cards each year. As long as you keep a thick file, and large enough credit limits to pad utilization numbers, then everything else should be based on what your goals are.
+10
I agree with this post, I have a very thick file, AAoA right around 6 years and I close accounts all the time if they become useless (still maintain 24 open CC accounts) I also tend to open 1 or 2 or 3 cards per year because I'm a sucker for promotional 0% APR's and early spending cash (made over $500 in 2016 in intro spending cash). Oldest card reporting 1978 which I rarely use, newest card reporting May 2017.