Effects of closed accounts on fico score

[CreditBob]

Does any type of account that is closed have any impact on the fico score even though the account stays on the report for ten years after it is closed or does it just benefit payment history for the future creditors?

[haulingthescoreup]

Well, if there are any negatives on it, still displaying, they would do the same damage as if they were on an open report.

Once installment accounts are closed (and therefore paid off), they stop helping your mix of credit. If you have no other installment loans still open, you've lost that contribution to mix.

Otherwise, I think that the only effect is the contribution to age of credit history. Coffee hasn't really kicked in, though, lol.

[smallfry]

Would you go out an buy a new car and get deeper in debt just to pick up a few points? The system has numerous flaws. In certain circumstances it penalizes the frugal.

[haulingthescoreup]

Ummm, wasn't advising this; just trying to answer the question.

[Anonymous]

Doesn't the % of OPEN accounts with balances affect the score?  We keep hearing that less than 50%  of open accounts should have balances in order to maximize FICO scores.

If this is indeed true, then closing positive accounts could have an immediate effect on scores due to this.   

The other potential negative is lowering available UTL, of course.

[haulingthescoreup]

OP, are we talking about closing or closed accounts?

If you're talking about considering closing accounts that are currently open, then I agree with Boscoe --if you carry balances, watch out for increasing the overall util, since you now have fewer open accounts, and watch out for having more than half of your accounts with balances.

[CreditBob]

I forgot to mention nothing but positive accounts, not any negative or derogatory accounts!!

Does any type of account that is closed have any impact on the fico score even though the account stays on the report for ten years after it is closed or does it just benefit payment history for the future creditors?

edit to add: I moved CreditBob's second thread on the same topic to this original thread to avoid confusion with replies on multiple threads.

Message Edited by haulingthescoreup on 04-13-2008 12:18 PM