Card cancellation and FICO Score

[PastorH]

It is in fact her oldest card.  When I said expensive, I meant interest, although we always PIF.  I think we'll charge something to it, so that we keep it for aging.

Thanks and blessings to all.

[Anonymous]

Great decision.  "Age of oldest account" is an important scoring factor and it is distinct from AAoA (Average Age of Accounts).  Although Age of Oldest would not be immediately affected, it would be when this account falls off, and there's no way to be certain that this couldn't happen a year or two after it was closed (as our friend SouthJ can tell you).

As you can see, buying something small at Sears every two years should be enough to keep it going.

And as you appear to realize the interest level on the card doesn't matter if you pay in full.  It could have an 812% interest rate and it wouldn't affect you.

[Anonymous]

I was looking at my Dad's monthly credit summary from Discover the other day and his AoOA is 51 years.  I always thought it was around 30 or so, but I guess he's had that one CC account super long and still has it open today. 

[NRB525]

---

@Anonymous wrote:

And as you appear to realize the interest level on the card doesn't matter if you pay in full.  It could have an 812% interest rate and it wouldn't affect you.

---

Credit One, and cards like the Golden1 Secured, which can have no grace period, interest starts immediately, would have an interest cost effect on the cardholder's wallet

For most cards that people want long term, however, grace period allows us to avoid interest cost.

[Anonymous]

Thanks NRB.  Good point.  The sears card sounds like it would belong to the conventional bulk off CCs with a grace period.

In your experience, do people here who have these rare cards in which interest starts immediately already know that fact about their card?  I am trying to figure out how much guidance about corner cases I need to give.

[Anonymous]

I think you'll find people on both ends of the spectrum.  There are those that don't realize they are paying interest right away on certain cards, while there are others that don't understand that you can use CCs without having to ever pay interest.  One of the #1 reasons I hear from people as to why they don't use credit cards and only use their debit card, for example, is because "they don't want to pay interest."

[RobertEG]

If a creditor provides you notice that they are "cancelling" a card/account, it could have more than one meaning.

It may mean that they are only closing the account, which wont delete it.

In that case, you will retain it for length of credit scoring (oldest account and/or AAoA).

However, it might also mean they are deleting the account with the CRAs, in which case you will lose it completely.

I would assume that their reason for cancellation would likely be one of housecleaning, for which deletion as opposed to only closing will remove any oblitations to monitor the accounts for possible requried updates, to respond to any consumer requests, such as GW deletions, or to respond to any possible FCRA disputes.