Closing Recently-Opened Credit Card Accounts

[kerplunk]

I'm sure this has been discussed mutliple times, but I searched and could not find the exact answer I was looking for.

What is the effect of the following scenario?

- 4 credit card accounts open for 13 years

- 3 new credit card accounts opened within the past 3 months (7 cards in total)

- 815 credit score

- Close 2 of the 3 new credit card accounts (5 cards in total)

1. How drastic of a hit does that credit score take?
2. What are the specific impacts aside from the hard inquiries? Average age of accounts, for example.
3. Does it make sense to simply keep those 2 credit card accounts open to obtain a higher FICO score?
4. Once an account is closed, does the account still age or would it be stuck at 1 month until it falls off in 7-10 years?

[Anonymous]

In your scenario, I am assuming that the only new event is the proposed closing of the two cards.  For example, for the recently opened cards you have already had time to see what impact their opening had on your FICO 8 scores.

My comments are in blue below.

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@kerplunk wrote:

I'm sure this has been discussed mutliple times, but I searched and could not find the exact answer I was looking for.

What is the effect of the following scenario?

- 4 credit card accounts open for 13 years

- 3 new credit card accounts opened within the past 3 months (7 cards in total)

- 815 credit score

- Close 2 of the 3 new credit card accounts (5 cards in total)

1. How drastic of a hit does that credit score take?  Zero hit.
2. What are the specific impacts aside from the hard inquiries? Average age of accounts, for example.  A few months ago (when you opened the cards) there was an impact on your AAoA, on your AoYA, and on the percentage of your accounts that are new.  You should already know what that scoring impact was, however, since it happened a couple months ago.  (Your total credit limit also went up, which would have cause your utilization to go down -- that might have given you a score boost, depending on what your utilization was before.)
3. Does it make sense to simply keep those 2 credit card accounts open to obtain a higher FICO score?  Since you would already have five cards, keeping the other two open will not improve your FICO score.  But if they are major credit cards (not store cards) and they have no annual fee, there are other reasons to keep them open.
4. Once an account is closed, does the account still age or would it be stuck at 1 month until it falls off in 7-10 years?  It continues to age until it falls off your report.  Very high probability that this will be within a month of the card turning 10 years old.

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[SouthJamaica]

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@kerplunk wrote:

I'm sure this has been discussed mutliple times, but I searched and could not find the exact answer I was looking for.

What is the effect of the following scenario?

- 4 credit card accounts open for 13 years

- 3 new credit card accounts opened within the past 3 months (7 cards in total)

- 815 credit score

- Close 2 of the 3 new credit card accounts (5 cards in total)

 How drastic of a hit does that credit score take?

It will probably take a significant hit from the additions of the 3 new cards. It will not take a significant hit from the closing of 2 of them.

What are the specific impacts aside from the hard inquiries? Average age of accounts, for example.

Average age of accounts is reduced by the addition of 3 new cards. Will not be much affected by the closing of 2 of them. Age of youngest account was drastically reduced by the addition of 3 new cards. Will not be affected by closing 2 of them.

Does it make sense to simply keep those 2 credit card accounts open to obtain a higher FICO score?

No

Once an account is closed, does the account still age or would it be stuck at 1 month until it falls off in 7-10 years?

Yes it continues to age until it falls off. It varies a great deal as to when it will fall off. Using your numbers, there is no guarantee that it won't fall off much sooner than 7 years, or much later than 10 years.

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[Anonymous]

Already solid responses above, so nothing to add there. Slightly off topic, but OP why are you looking to close a couple of cards so quickly after just opening them?

[kerplunk]

Thank you for the responses, everyone.

Reading the "Credit Cards" forum made me a little too excited to get new credit cards when I did not need to. I prefer simplicity in my life and two of the cards I got do not make sense for me to keep because of annual fees. I do not want to product change to something else. I think 5 cards is the ideal amount to have.

[Anonymous]

Certainly you should close any card you don't like and which has annual fees.  The exception might be if you got a signup bonus.  In that case you should not close it at month 4, since that flags you as a bonus chaser.  Better is to wait until month 11 or 12.  Some people advise waiting until month 13 if the CC issuer is one who refunds the annual fee if you close within 29 days of the fee being assessed.