So much for the idea of don't close credit cards unless they are costing you money.
@Tuscani wrote:
@smallfry wrote:
@Anonymous wrote:Skiffy,You say that the card will continue to report with 1 year of age if I close it now. Isn't this the point of closing it, so the age is no longer factored into the average age?
Closed and open accounts both are figured in the equation for your average age.
Correct. And the only area of scoring where closing an account can hurt you is in the revolving utilization calculations. While a closed revolving account with a balance is included in utilization, a closed account with a zero balance is not.
In the area of length of credit history, closed accounts are treated no differently than open accounts. That is, the length of history on a closed acct still gets counted right along with the rest of the closed account's history. In fact, the length of credit history gets counted for every trade line on your report, regardless.So, the only harm by closing a revolving account is to the utilization percentage, while, in the long run, a closed account will be removed from your credit file after 10 years, which could lower your score at that time due to the loss of that history.
Message Edited by Tuscani on 06-29-2007 06:05 AM
I am glad you made this post, I tried to last night but I was exhausted and kept messing it up. There is a lot of confusion on this subject. Please sticky this thread!
@fused111 wrote:
So much for the idea of don't close credit cards unless they are costing you money.
@Tuscani wrote:
@smallfry wrote:
@Anonymous wrote:
Skiffy,You say that the card will continue to report with 1 year of age if I close it now. Isn't this the point of closing it, so the age is no longer factored into the average age?
Closed and open accounts both are figured in the equation for your average age.
Correct. And the only area of scoring where closing an account can hurt you is in the revolving utilization calculations. While a closed revolving account with a balance is included in utilization, a closed account with a zero balance is not.
In the area of length of credit history, closed accounts are treated no differently than open accounts. That is, the length of history on a closed acct still gets counted right along with the rest of the closed account's history. In fact, the length of credit history gets counted for every trade line on your report, regardless.So, the only harm by closing a revolving account is to the utilization percentage, while, in the long run, a closed account will be removed from your credit file after 10 years, which could lower your score at that time due to the loss of that history.
Message Edited by Tuscani on 06-29-2007 06:05 AM
"So much for the idea of don't close credit cards unless they are costing you money"
Why do you say that?
Agreed.. my brain tends to focus on JUST the scoring aspect sometimes.
fused111 wrote:
Tuscani:There are other reasons to close positive CC accounts other then they are costing you money. Maybe some folks do so because they have trouble managing them or some of their oldest cards are starter cards and have little or no perks/rewards. My concern is a lot of people think closing their CCs will cause their scores to plummet. I am glad you explained in your post the possible effect on revolving utilization calculations when closing a CC, and how a positive closed CC TL is treated the same as an open one.
