Cancelling Cards and Change of Accounts

[Anonymous]

I have recently started looking to buy my first home and have become pretty familiar with the seedy world of mortgage brokers and my fico score. The question I have follows:

I pulled all three scores (747, 780 & 787) and reports tonight and they all say that I have too many revolving credit accounts (range from 21 - 25). I certainly don't have that many credit cards and when I dig a little deeper I see that 10 of the listed accounts have been closed by me. I recall that when Sears recently updated their store cards they offered to issue me a Sears Mastercard which I declined. I never took possession of the card yet it shows up on my credit report as having been opened and cancelled. There it sits on my report as a "nick."

I guess my question is why don't cancelled or closed accounts, some as 10 years old, get removed from your credit history? I've never been late with a payment and have no "dings" on the report. I do  understand that if an account has been "abused" that they might not want to let you cancel it and remove it from your history but why do closed accounts in good standing stay on to haunt us?

Thanks in advance for your replies

[haulingthescoreup]

I'm assuming that this message came from the FICO site. If it lists 21 - 25 accounts, and only 10 of them are closed, that leaves 11- 15 open and active, which FICO considers to be too many. FAKO score reports will give you all sorts of weird and misleading advice, so tune them out if you pull reports from TrueCredit, etc, or directly from the bureaus.

Closed accounts in good standing don't hurt your score. They even give you help on your history for 10 years after they are closed, and then they go poof.

I need some confirmation from the veterans on this, but I think that if you pay off (but don't close) all but around 5 of your open accounts, so that only these 5 are reporting, this ding might go away. Take turns on which 5 are reporting. Furthermore, of those 5 that are reporting, have each of them showing under (not at) 10% of their credit limit for maximum impact.

Help, FICO veterans! With my puny 5 CC's and a few installment loans, I don't have a whole lot of experience with 25 accounts reporting.

edit: Excellent scores, by the way. Usually anything over 720 puts you in high clover for mortgages. Sometimes for those of you in the high-altitude, low-oxygen score levels, you will get weird feedback from FICO. They don't seem to be able to say, wow, dude, pretty good.

Message Edited by haulingthescoreup on 10-08-2007 09:48 PM

[Anonymous]

I forgot to mention that I have balances on only 4 accounts, one that is at 23% of CL with a promotional 0% APR which will be paid off before the interest kicks in in 7 months (I have been paying this account about $200/month for a year so far, ), one that has a $41 balance that I'll pay off when the bill arrives, one that is 30% of the credit limit and one that is at 80% of CL (a new motorcylce purchase at a fixed 3.99% for the life of the loan).

Thanks

[haulingthescoreup]

Well, then, there you go. I don't know what that's all about, other than FICO really cannot stand to not give you some sort of scolding, no matter how good your scores. I would think that you will be welcomed anywhere you go.