Re-read rbentley’s response. The answer you seek is already there.
@Anonymous wrote:I have had a few old accounts come off of my file lately and my score has been dropping by a point or two each time (Experian FICO 8). For instance i had an account that was paid off in 2004 and it was closed in 2009, came off my file recently and my score dropped (1 point). Is this what is causing my score to drop point by point?
When an old closed account drops off your report, it usually causes the "average age of accounts" to go down, which can cause some point loss.
If it was your oldest account, then it also impacts the 'age of oldest account' factor.
@Anonymous wrote:OK, so closed accounts are also counted in the AAOA calculation? Very interesting.
Yes, closing an account has no impact on the FICO aging factors. It's only when the closed account falls off of your report that the impact is felt.
Although this often happens many years down the road -- in your case approximately 10 years after closing, which by all accounts is typical -- it can happen sooner. I had 5 closed accounts which fell off of my EQ report within a year of closing.
@Anonymous wrote:Does anyone know if closing a new cc will increase (or decrease) my score by increasing my aaoa?
Here is the specific example. I opened three credit cards last year to transfer balances to a 0% APR. These cards will all be paid off now by the end of the year. By transferring the balances I took a hit (I think mostly because it drastically lowered the average age of accounts). So my oldest cc is like 15 years old, plus one more that is around 6 years old...so I added these three and I went from like 10 years average to 4 years average. Soooo....If I close these accounts when I have ZERO BALANCE ON ALL CARDS (which will be the case by the end of the year) will that hurt my score.
The alternative (and I posted about this a little while ago and got a response that seems to indicate this) is that the AAOL includes closed accounts as well. If this is the case, closing the account would make no difference I believe, so no point in doing it?
Thanks.
It will have no effect whatsoever on your average age of accounts, as I told you in your other thread asking the same question.
You already took the damage. The closed accounts will continue to report for up to 10 years.
