Closing Oldest CC.

[jawbrkr]

Wait, so if i close my oldest card and my UTIL is not affected, why would my score drop? Especially since closed cards still factor in on AAOA? I ask because I was planning on closing my Discover card. It is my oldest card. But my Amex is just as old. 

[rmduhon]

The only reason I could think know of is if closing a card changed the percentage of cards reporting a balance. For example, if you have 9 cards and 4 report a balance and you close one of the cards that isn't reporting a balance then you would have half of your cards reporting a balance which will penalize you.

[jawbrkr]

I have read, to maximize scoring, the method is to have one card reporting a balance and utility at  around 1%. But who knows how true that realy is. I have 6 cards and usually I let 2 report a combined 1%. I would love to know the answer to that if anyone knows for sure.

[Anonymous]

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@jawbrkr wrote:

I have read, to maximize scoring, the medthod is to have one card reporting a balance and utility at  around 1%. But who knows how true that realy is. I have 6 cards and usually I let 2 report a combined 1%. I would love to know the answer to that if anyone knows for sure.

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Your total utilization can be much higher than 1% with no penalty.  (Total U is all cards combined together.)  Total U penalty begins when you exceed 8.99%.

Individual utilization (each card considered by itself) is also a factor, but here you have even more latitude: < 29% should involve no penalty.

Bear in mind that all of the above involves strategies to optimize shortly before an important credit pull.  Since those important applications for credit are rare for most people, such people often don't worry about keeping their scores at their absolute best every single week.  And that is fine, since those short-term strategies don't help you build your score gradually over time.

[Anonymous]

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@Harvey26 wrote:

Hey Family,

Quick Question... My mom has an old local credit union card that has an 8.5K limit and 8.99APR also no rewards and has been open since 2009. So about 8 years. I was added as an joint so help build my credit. She has recently opened a Chase Freedom and has had it for almost 2 Years in Sept. and has an 11.5K limit and 14.74APR. (will talk too them about lower it soon.) But how would this affect our credit? She stand at 770 across the board maybe a little higher depending on which CRA. I am current at mid 600s due to high UTL. but I dont plan on applying for any credit anytime soon.

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I can't tell from the thread thus far whether the card in question is the mom's oldest or whether it is the oldest appearing on our OP's report (or both).

It's hard to advise without knowing more about the mom's profile.  We know she has two cards.  Does she have others?  How many?  How old is each one?  In general one should be reluctant to close one's oldest open credit card if it has no annual fee, which is why we'd need to know more before we could say this is an ok idea.

Our OP explains in the thread that (a) he has a high CC utilization and (b) he wants to apply for more credit.  That in itself is a red flag.  The best solution to the problem of high indebtedness is not to try to increase one's capacity to go into debt still further.  Rather it is to pay it off.

[SouthJamaica]

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@rmduhon wrote:
The AAoA won't go down while it's still on the reports, closed or not. Generally speaking, accounts will stay on the reports for about ~10 years after closing. However, it can affect the UTI since your available credit will be 8.5k lower than before.

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They don't always stay on the reports for 10 years. I have some that dropped off of my EQ reports in less than a year from when they were closed.

[SouthJamaica]

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@Harvey26 wrote:

Hey Family,

Quick Question... My mom has an old local credit union card that has an 8.5K limit and 8.99APR also no rewards and has been open since 2009. So about 8 years. I was added as an joint so help build my credit. She has recently opened a Chase Freedom and has had it for almost 2 Years in Sept. and has an 11.5K limit and 14.74APR. (will talk too them about lower it soon.) But how would this affect our credit? She stand at 770 across the board maybe a little higher depending on which CRA. I am current at mid 600s due to high UTL. but I dont plan on applying for any credit anytime soon.

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I don' think she should close it.

If it's causing you a problem because you're an authorized user, then stop being an authorized user.

[rmduhon]

@SouthJamaica That's why I said generally speaking about 10 years. From what I've seen, it's usually closer to 10 years than shortly after closure like in your case. And then you have situations like my hubby who has an account on 2 reports that has been closed for 14 years now.

[Anonymous]

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@SouthJamaica wrote:

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I don' think she should close it.

If it's causing you a problem because you're an authorized user, then stop being an authorized user.

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That's what I was thinking, but on the last page the OP said that they won't let him be removed as an AU, only the card can be closed.  That's the first I've heard of something like that. Has anyone else heard of that?  Perhaps it's an odd rule for that particular CU? 

[rmduhon]

In the first post the OP also said he was added as joint so maybe it's not an AU situation? That would explain having to close the card instead of being removed from it.