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Does account closure look bad, good, or neutral when I apply?

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Swatch
Frequent Contributor

Does account closure look bad, good, or neutral when I apply?

I have new accts opened 6/21, 8/21, 12/21 (not counting new student loans that are deferred). That is, of course, too many recent accounts for many banks.

 

I am really looking forward to closing the 6/21 card with AMEX when it is just over a year old. That won't be a negative to banks when I apply, will it? (My AAoA is around two years and a few months.)

 

I could close the 12/21 card once it hits 6 months if that helps. Would that hurt or help, or neither? Would it mean that "6 months" always gets averaged in, since it can't age more? Would it mean that they think I close accounts too quickly? (I have other accounts over 10 years old.) It is a Citi card and I wanted to close it before the AF hits, but I could close it after the AF.

I do AZEO.
Message 1 of 4
3 REPLIES 3
K-in-Boston
Credit Mentor

Re: Does account closure look bad, good, or neutral when I apply?

An account won't stop being a new account by being closed, only when it ages.  They would not however always remain "6 months" in the example you used.  Closed accounts continue to age and contribute to age scoring metrics until they fall off of your credit reports (generally about 10 years after closure).

 

Closing cards soon after opening them can appear as though you are churning them simply for the signup bonuses.  Even if that is the case, you generally don't want it to appear that way.  If a card is not useful but has no annual fee, it's better to keep it open a bit longer.  If it does have an annual fee, see if there are product changes to a no- or lower-AF product.  In the case of Amex, they can very much frown on closing or downgrading accounts even a year after opening and it may prevent you from being eligible for future Welcome Offers on other Amex products.

 

The damage from the new accounts is done.  Closing them will not change that, but the effects of new accounts will fade.

Message 2 of 4
krit
Regular Contributor

Re: Does account closure look bad, good, or neutral when I apply?

Over the past several years, I closed two AF cards, two small limit Cap1 cards that were going nowhere and a couple of stores cards I regretted opening. (This rebuild, I vowed "no more store cards" but broke my own rule twice.) I replaced several of these with more desirable no-AF cards that have grown very nicely, but in the process I murdered my AAoA and succeeded in unnecessarily suppressing my scores. I still believe I did what I needed at the time, though, and I'm very happy with the cards I have now now. Unfortunately, I'll be gardening quite a while to build my AAoA back up. 🤷 I'll never regret getting rid of the AF cards, as my spend doesn't warrant paying an AF. However, YMMV. Everyone's situation is different. Good luck to you! 

 

ETA: I guest what I'm saying is, hang onto any cards that might grow and are useful to you. They will continue to age even if closed, but if you're going to be tempted to constantly be replacing them, you might want to rethink that. 

Message 3 of 4
FireMedic1
Community Leader
Mega Contributor

Re: Does account closure look bad, good, or neutral when I apply?

Keeping them open will do more good than closing them. Ref: @K-in-Boston Many here would love to have AMEX. Why close it. If you apply for a card. Its for the long run. Not pick and choose. The hits are on your report when you got the 3. Let them help you for the long run. If you use the card enough it pays for the AF. So it might be worth it to keep them open. Heck I'd pay a AF for a AMEX. But they turned me down for too many new checking accounts last year. 1 account with NFCU. Smiley Mad So I wait.


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