Average age and conflicting statements

[creditninja9000]

Okay, I've been reading lots of posts here and everywhere else and they don't make sense. I've read people saying closed accounts aren't factored into the average age, which is why you shouldn't close your oldest account. Then I see that closed and open accounts are factored in. If that's the case then why would it matter to close your oldest account other than affecting your total avail. credit?

I'm just wondering because right now I have 6 credit cards. I recently took out a student loan to pay them all off, and close the ones that are least beneficial, keeping a zero balance on the ones left open while I pay down the loan. I plan to close all cards up to the first two I opened in spring of 2005 from Capital One and BoA (excluding a third one from 1FBUSA that sucks). However, depending on how the age is truly calculated it makes more sense for me to keep the ones that are the best, have the best rates and CLs, and my WaMu card (opened 6 months ago)to help me monitor my score.

So can anyone help me figure this out, I'd be happy to provide more info to help. The one from 1FBUSA was definitely my largest limit (5900) but BoA has always been generous in raising my limit they start to see that I'm not maxed out and carrying a utl. of about 30% or less, it's been $2400 for the past year because it's been maxed out but it is now $0. In the end I would like to be able to get a blue card from Amex (I saw no sense in carrying around 6 Visa and MasterCards and Amex have some great additional benefits) but I'm assuming that it won't happen for at least a couple of years right?

Message Edited by ejbeasley on 03-17-2008 09:10 AM

Message Edited by ejbeasley on 03-17-2008 09:12 AM

[Anonymous]

Yes closed accounts count towards the age of accounts.  When you look at your credit reports you can see where closed accounts still show and state they will stay on your report until x-date.

It will affect your utilization obviously.  My suggestion, keep all 6 credit cards open after you pay them off there is no reason to close them......If you are worried about temptation just cut them up.

I have 7 open Credit Cards all with $0 balances....

[sh9730]

Plus, its not only how old (how long) your file is overall, its the average age. SO, once you close an account you only get to count how many months it was OPEN in your average age.  Whereas if you leave it open with occeassional usage, (so they dont close it due to inactivity) you keep adding months to your average age. As well as what was already stated, your utils are better.

[MidnightVoice]

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sh9730 wrote:

Plus, its not only how old (how long) your file is overall, its the average age. SO, once you close an account you only get to count how many months it was OPEN in your average age. 

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I am not sure, but I don't think that is true.  I set up a spreadsheet to check, and I think it counts their whole age from opening until it drops off.

I may be wrong - it has happened 

[creditninja9000]

Ah, I see so it doesn't really matter what accounts I keep open or closed what matters more is how my payment history, CL, and ultilization associated with those cards will affect my score. Well, I closed my largest limit one because I did get tempted into using the card before EVEN though I had cut it up lol. So I just said good bye to the entire account, I'd rather take the hit. My utilization won't be much at all because right now they all have a balance of 0 as I pay down the loan and I don't plan to charge anything but my cell phone bill and a couple of others that I will pay off right away anyway.

I also hear its bad to have a lot of available credit also, especially since I'm a student with a part time job. So might not be a bad idea just to close that account anyway. I see BoA raising my limit soon anyway, they make frequent inquiries and have lowered my rate in the past year 6 months without me asking.

So I may keep the cards that allow me to do online only statements because I don't want to have to be worried about ID theft or anyone finding that information and using it. I would just like to have as few accounts as possible right now I'm down to 4, the first three I opened minus the 1FBUSA and a store card where I shop frequently to receive 20% off my purchase. I'm closing the WaMu I signed up for last summer because I signed up for a myFico one year membership.

Like I said in the end, I don't plan on getting a car for at least 2 more years, a house probably not for the next 5 at least, I'd just like to get an American Express card with a good rate to get the benefits of holding the card. I hear there are less and harder to make claims with Visa and MC.

Thanks for the advice, any other input is appreciated too.

[creditninja9000]

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@MidnightVoice wrote:

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@sh9730 wrote:

Plus, its not only how old (how long) your file is overall, its the average age. SO, once you close an account you only get to count how many months it was OPEN in your average age. 

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I am not sure, but I don't think that is true.  I set up a spreadsheet to check, and I think it counts their whole age from opening until it drops off.

I may be wrong - it has happened 

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Yeah see this is where I get confused hahah. But it would make more sense for the entire age, open or closed, to be calculated, rather than just the time it was open. To me it would only make sense that the account is averaged from the date it was opened (closed or not), or only open accounts and how long they've been opened. But, averaging only the months it was opened doesn't make sense at all.

But again, I get confused in where bad to close accounts because it shortens length of history.....this would only be the case after it drops off in 10 years right?

[BallBounces]

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MidnightVoice wrote:

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sh9730 wrote:

Plus, its not only how old (how long) your file is overall, its the average age. SO, once you close an account you only get to count how many months it was OPEN in your average age. 

---

I am not sure, but I don't think that is true.  I set up a spreadsheet to check, and I think it counts their whole age from opening until it drops off.

I may be wrong - it has happened 

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Unfounded opinion warning     :

I agree with MV.  I think the AGE of even closed accounts counts, not just the duration that they were open.  And like I said, I have NOT run the detailed equation on my own records to prove this yet.

[MidnightVoice]

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VistaV wrote:

Unfounded opinion warning     :

I agree with MV.  I think the AGE of even closed accounts counts, not just the duration that they were open.  And like I said, I have NOT run the detailed equation on my own records to prove this yet.

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If any of the Mods ever drag themselves out of bed, maybe they can chime in.....................  

[Logical]

I have an auto loan, closed account, paid off 9.5 years ago that counts as a 10+ year account (from when it was opened) on my "average account Age."  This I proved in a spreadsheet. Of course, in a half a year it may drop off and I'll lose the age. Que sera, sera. So, yes, it keeps adding up until it drops off.

[creditninja9000]

Hmmm, thanks, so it appears the thing to do is get an early start on the cards you'd like to have and only those, not opening non-sense accounts along the way. I suppose that as long as I keep my oldest accounts active the new ones I'm getting ready to close won't matter when they drop off my report unless I have newer credit that is younger than those closed accounts, which won't be anything but the Amex card, or any loans I acquire to get a house or car, which won't matter because the goal was to have the best credit I could before I get those anyway.

So it appears I'm on the right track. So I won't be applying for anything else but the Amex in the near future. Probably won't be needing any others until it's time for a car or house. How long should I wait before applying?