Closing Newest Credit Card - Credit Score Impact?

[mystro9876]

Hello All,

My SO inexplicitly opened a new credit card about 1 year 3 months ago.  Its the newest credit card on her file by at least 6 months, however I would like to close it as it has an annual fee attached.  She has 7 open revolving credit lines.  It has zero balance and the credit limit decrease would not impact her credit utilization.   Her most recent closed revolving account was about 2.6 years ago, and the next most recent closed CC was about 10 years ago. 

Would there be any adverse impact, whether her credit score or her credit report's appearance, by closing it?

Thank you

[TheFIGuy]

@mystro9876 SO will have a possible overall aggregate UTIL% impact. This is solely dependant on her current overall aggregate UTIL% and how much credit limit that "in question" card has; see below:

Credit Cards:

1. Alpha Credit Card - Credit Limit 3k w/balance 1k
2. Bravo Credit Card - Credit Limit 5k w/balance 1k
3. Charlie Credit Card - Credit Limit 5k w/balance 1k

Aggregate UTIL% is (13k Credit Limit/3k Balances = ~4% Aggregate UTIL%)

To "KISS," maintain an optimal FICO score you want SO to stay below 9% Aggregate UTIL%. If SO is below 30% currently and closing the account moves SO above 30%, you will see a scoring impact. If SO will stay below 30%, or even better, 9% aggregate UTIL%, then SO should not see a major FICO score impact. Without a full profile view, we cannot give a solid answer, and everything is YMMV.

[Kforce]

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@mystro9876 wrote:

Hello All,

My SO inexplicitly opened a new credit card about 1 year 3 months ago.  Its the newest credit card on her file by at least 6 months, however I would like to close it as it has an annual fee attached.  She has 7 open revolving credit lines.  It has zero balance and the credit limit decrease would not impact her credit utilization. 

1) Then it should have no impact on her score.

2) If a card has an AF and is not earning good rewards, it might be wise to drop it even if hurting "Fico" a little.

 Her most recent closed revolving account was about 2.6 years ago, and the next most recent closed CC was about 10 years ago. 

Would there be any adverse impact, whether her credit score or her credit report's appearance, by closing it?

Thank you

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[mystro9876]

Thank you! so the actual process of closing my SO's card shouldn't impact my score (from an AAoA perspective) being that its the newest one.  The only real impact would be from a utilization perspective, yes? 

[Anonymous]

Correct.  Age of accounts factors are not impacted when an account is closed.  The closed account as long as it is present on the credit report impacts age of accounts the same way it would if it were still open.

Definitely close the card... AF on a card that there's no need for makes it a no brainer decision in my view.

[Anonymous]

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@mystro9876 wrote:

Thank you! so the actual process of closing my SO's card shouldn't impact my score (from an AAoA perspective) being that its the newest one.  The only real impact would be from a utilization perspective, yes? 

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Incorrect, there will also be an impact on the denominator being reduced by one in the percentage of accounts with a balance metric. But considering the number of accounts that should not be a big deal. You might get a score change one account with a balance sooner. 

The revolver:loan ratio could also be impacted, though it could have no impact at all. 

@mystro9876 One more note. Nothing to worry about, I would close it. I would wait until right before the annual fee is due though, that way you rack up more payment history free.