Closing youngest credit card to improve score with 0% utilization

[Anonymous]

SO heres my question. I am in the process of applying for a mortgage. My Credit utilization is now at 0. I have 10 open accounts. But I recently opened an amazon card 3 months ago. My oldest card is 20 years, the second youngest is 2 years. I wanna improve my score and evey point counts. I know it will stay on my file as a closed account if i close it, but would it be removed and only show the 2 year card as the youngest account? Therefore increasing the 10% portion of my fico new credit section? 

[K-in-Boston]

Welcome to the forums.  If you are in the mortgage process, it is ill-advised to open or close any accounts unless specifically asked to do so by your lender.  Closed accounts still factor into age on FICO scoring.  Closing it will not improve your mortgage scores in any way.

[Anonymous]

Closing your [youngest] account will have no positive impact on your age of accounts.  A closed account is averaged into your AAoA the same way it would be if it were open.  Your AoYA will still be equal to the age of that account whether or not you close it.

You also wrote originally that your utilization is currently 0%.  You want to make sure you implement AZEO, which means to allow a small balance to report on just 1 of your major bank cards.  So if you've got 10 card, have 9 of them report $0 and the 10th one (a major bank card, not a store card, AU card, etc) have it report something in the (say) $5-$20 range.  This could possibly bring you a few more Fico points.

[Anonymous]

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@Anonymous wrote:

Closing your [youngest] account will have no positive impact on your age of accounts.  A closed account is averaged into your AAoA the same way it would be if it were open.  Your AoYA will still be equal to the age of that account whether or not you close it.

You also wrote originally that your utilization is currently 0%.  You want to make sure you implement AZEO, which means to allow a small balance to report on just 1 of your major bank cards.  So if you've got 10 card, have 9 of them report $0 and the 10th one (a major bank card, not a store card, AU card, etc) have it report something in the (say) $5-$20 range.  This could possibly bring you a few more Fico points.

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This x 1000. Even a FICO score simulator will show you that a balance at exactly $0 across ALL cards gives you a slight ding in comparison to carrying a small balance on one single card (pick any one). Something like 5 points but he said every point counts, right? 

[Anonymous]

Actually closing that Card could hurt you. It depends on whether or not the ratio of accounts with a balance includes closed accounts. But leaving it open with a zero balance can only help you, Scorewise.

[Anonymous]

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@Anonymous wrote:

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Even a FICO score simulator will show you that a balance at exactly $0 across ALL cards gives you a slight ding in comparison to carrying a small balance on one single card (pick any one). 

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While the concept of AZEO is well taken, I wouldn't say "pick any one" as people have indicated that using an AU card or store card at times has resulted in the card not being "seen" as having balance by the algorithm and thus the AZ penalty has been realized.  That is why I suggested a major bank card be used in my post.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

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Even a FICO score simulator will show you that a balance at exactly $0 across ALL cards gives you a slight ding in comparison to carrying a small balance on one single card (pick any one). 

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While the concept of AZEO is well taken, I wouldn't say "pick any one" as people have indicated that using an AU card or store card at times has resulted in the card not being "seen" as having balance by the algorithm and thus the AZ penalty has been realized.  That is why I suggested a major bank card be used in my post.

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Very true it needs to be a bankcard: MasterCard Visa American Express or Discover.

just to clarify: It only matters if it's an authorized user card on score 8 and newer. There to avoid point loss, you need both a primary and an authorized user account reporting a balance, if you have one. (There are separate AZ and AU AZ losses on 8 and newer.) 

The mortgage scores on the other hand, see authorized user cards just like primary cards, so you only want one card reporting a balance there, true AZEO, but even a balance on an authorized user account will save you the AZ loss on the mortgage scores.

Also important to note that the mortgage scores exclude cards with high limits. The cutoff for the Experian mortgage score is somewhere between $26,000 and $29,000, whereas for the other two the cut off is $35,000.

So you need one bankcard with a credit limit of less than $26,000 reporting a small balance for your best mortgage scores, to make it as easy as possible. 

[Anonymous]

Interesting regarding the mortgage scores and AZEO card limits.  I'm not sure the last time I pulled my mortgage scores that the AZEO card I used had a low enough limit.  I may try again just to see if my mortgage scores move any higher.  Hummm.

[Anonymous]

Wouldn’t that be a nice surprise, you could’ve been under all zero loss and have a much higher score!

[Anonymous]

For sure.  I'll be able to retest the last week of this month.  I've got 3 accounts that need to report in order to reposition my AZEO account as a lower limit one.