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Does the FICO score drop when a closed account is removed from your file?

apache2a
Valued Member

Does the FICO score drop when a closed account is removed from your file?

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?

Message 1 of 11
10 REPLIES 10
rbentley
Established Contributor

Re: Does the FICO score drop when a closed account is removed from your file?

Closed accounts remain on your report for 10 years, contributing to your AAoA. After 10 years, when they drop off, your AAoA will likely take a minor hit when that history is lost.
Message 2 of 11
apache2a
Valued Member

Re: Does the FICO score drop when a closed account is removed from your file?

Thanks.  Why would it take a hit by the way?  Since it was closed already?  Shouldn't it go up as you have less credit cards on the list?

Message 3 of 11
NRB525
Super Contributor

Re: Does the FICO score drop when a closed account is removed from your file?

Re-read rbentley’s response. The answer you seek is already there. 

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
Message 4 of 11
SouthJamaica
Super Contributor

Re: Does the FICO score drop when a closed account is removed from your file?


@apache2a 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.


Total revolving limits 663000 (585000 reporting) FICO 8: EQ 716 TU 747 EX 713

Message 5 of 11
apache2a
Valued Member

Will closing a NEW credit card from my file increase my credit score by increasing the aaoa?

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.

Message 6 of 11
apache2a
Valued Member

Re: Does the FICO score drop when a closed account is removed from your file?

OK, so closed accounts are also counted in the AAOA calculation?  Very interesting.

Message 7 of 11
SouthJamaica
Super Contributor

Re: Does the FICO score drop when a closed account is removed from your file?


@apache2a 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. 


Total revolving limits 663000 (585000 reporting) FICO 8: EQ 716 TU 747 EX 713

Message 8 of 11
SouthJamaica
Super Contributor

Re: Will closing a NEW credit card from my file increase my credit score by increasing the aaoa?


@apache2a 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.


Total revolving limits 663000 (585000 reporting) FICO 8: EQ 716 TU 747 EX 713

Message 9 of 11
Brian_Earl_Spilner
Community Leader
Mega Contributor

Re: Will closing a NEW credit card from my file increase my credit score by increasing the aaoa?

You already took the damage. The closed accounts will continue to report for up to 10 years.




Message 10 of 11
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