I've searched this question through and through and can't seem to get a definite answer, so I was hoping the MyFico experts could help me out.
What effect does closing a card have on my credit score? I've seen that it will continue to report for 10 years, so does this mean that the AAoA will stay the same? What if it's my oldest card? Since it will continue to report for 10 years, will my AoOA also stay the same for 10 years? Also, do lenders look at closed cards negatively? Will closing a couple cards here and there affect my chances of getting other cards? I know Amex requires you to keep cards for at least a year before closing, otherwise they'll clawback your SUB. Do they do this for co-branded cards as well?
If closing a card doesn't affect the age of my accounts for 10 years, will it affect my score in and of itself, given that utilization isn't at issue?
[2/2019]
@Anonymous wrote:Closing a card will have no impact on your credit scores.
Your AAoA will continue to grow with the card closed by 1 month/mo. If the card is your oldest account, your AoOA will continue to grow by 1 month/mo as well. Whenever the accounts falls off your reports (typically 10 years down the road) your AAoA will drop and if it's your oldest account your AoOA will drop to the age of your next oldest account. At that time it's possible that you could see a slight score drop related to these age of accounts factors.
Thanks for the answer. Okay, so closing a card in and of itself doesn't affect your credit score. How do lenders view closed cards? Do they stand out and are they viewed negatively?
Also, given that at that point, the age of your accounts is likely around 10~ ish years, the score drop probably isn't much, if any, correct?
@Anonymous wrote:
@jdbkiang wrote:
@Anonymous wrote:Closing a card will have no impact on your credit scores.
Your AAoA will continue to grow with the card closed by 1 month/mo. If the card is your oldest account, your AoOA will continue to grow by 1 month/mo as well. Whenever the accounts falls off your reports (typically 10 years down the road) your AAoA will drop and if it's your oldest account your AoOA will drop to the age of your next oldest account. At that time it's possible that you could see a slight score drop related to these age of accounts factors.
Thanks for the answer. Okay, so closing a card in and of itself doesn't affect your credit score. How do lenders view closed cards? Do they stand out and are they viewed negatively?
Also, given that at that point, the age of your accounts is likely around 10~ ish years, the score drop probably isn't much, if any, correct?
Not necessarily. Suppose Bob has exactly one 20 year old credit card and no other cards (except maybe a couple closed auto loans). He discovers these forums and begins applying for really good rewards cards and closes his old CU card, since he isn't using it any more. When the old card falls off, his Age of Oldest Account will go from 30 to 10 (not good at all for his score). If the old card is deleted at year four instead of year ten (which could happen) then his AoOA will ge from 24 to 4... a very precipitous drop. Losing an extremely old account will affect his AAoA as well.
Bob as described is not fictional. I have seen a lot of Bobs in the last few years with exactly this story.
I see, that's good to know. Thanks for the heads-up, I won't be Bob, hopefully. Btw, at what point does AAoA stop mattering? I kind of assumed that with an AAoA above 10, even if it were to drop from 20 wouldn't be much of an issue.
That being said, do card closures affect new card apps?
@Anonymous wrote:Note that, in the case of Bob, the chief factor being affected is Age of Oldest Account (AoOA), not AAoA. I think I added a side comment that in addition to the scenario hurting AoOA, it would also affect AAoA (to a lesser degree).
I see. So just to confirm, both AoOA and AAoA will be affected, but with a relatively thick file, the AAoA effect won't be as noticeable, where as if your second card is much younger than your oldest, the AoOA will take a bigger hit and therefore have a larger impact, right?
Thanks, BBS for the clear answer as well. That's comforting to hear, and I'll likely be closing my SW Premier card soon. As a side question, will they refund the AF? It was charged to me less than 2 weeks ago.
@Anonymous wrote:Neither AoOA or AAoA is impacted immediately; The impact to either/both happens when the account falls off of your CR, typically 10 years down the road after account closure. A lot can change with your file over the course of a decade. Your second oldest account if still open will be 10 years older. Your AAoA will most likely increase over that time, depending on how many accounts you open over the course of 10 years. Those additional accounts, though, thicken your file and will reduce the adverse AAoA impact when your old account does fall off at some point.
I can't really comment on your AF, but it definitely doesn't hurt to ask.
Thank you so much for the clarifications. I appreciate it a lot!
As a follow-up, are AU accounts counted in the account age as well? I had a friend added on as AU with no cards of his own, but when he applies, he keeps getting told he doesn't have enough consumer credit.