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Should I cancel my youngest credit card(s)?

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Should I cancel my youngest credit card(s)?

I moved to the US a few years ago and I'm building my credit from scratch. My negative factors are the low number of accounts (9) and low average age of open accounts (1 yr, 9 mos).

My question is, should I cancel my most recent credit card(s), i.e. the ones younger than the average age? This will improve the average age but will of course will also reduce the number of open accounts and increase the number of closed accounts. Will the net effect be positive or negative?


Thanks,
Barry
Message 1 of 6
5 REPLIES 5
Valued Contributor

Re: Should I cancel my youngest credit card(s)?

9 accounts is not a low number of accounts.  Closing out a credit card will not affect your average age of accounts for up to 10 years.  I would assume you are looking at your Vantage scores and using some app like Credit Karma that recommends a ridiculous number of accounts(because they get paid when they refer you).  

 

Pull your real FICO scores as they are the only ones that matter and disregard just about everything the app you're using recommends.

 FICO 8
Message 2 of 6
Valued Contributor

Re: Should I cancel my youngest credit card(s)?


@BarryF wrote:

I moved to the US a few years ago and I'm building my credit from scratch. My negative factors are the low number of accounts (9) and low average age of open accounts (1 yr, 9 mos).

 

My question is, should I cancel my most recent credit card(s), i.e. the ones younger than the average age? This will improve the average age but will of course will also reduce the number of open accounts and increase the number of closed accounts. Will the net effect be positive or negative?

 

 

Thanks,

Barry


Canceling your new accounts will have absolutely no effect since accounts closed in good standing continue to remain on your credit report for 10 years.

 

To optimize your FICO Score 8 scores (which are the scores used by the vast majority of lenders) you need just three revolving credit accounts and one installment loan.  So if you currently don't have a loan reporting on your credit report there's an opportunity to increase your scores.

 

Your Average Age of Accounts is seen as a "negative" because you opened too many accounts too quickly which caused it to fall below the desireable benchmark of 2 years.  But in just three months it will be at 2 years and you will see an increase in your score for attaining that benchmark.  I would suggest not applying for any more accounts for the next 6 months to allow your current accounts to age and to ensure that if/when you add another account the AAoA does not fall below 2 years.

 

The recommendation to obtain your FICO Score 8 scores is a sound one; you can get them for just $1 from creditchecktotal.com; just be sure to cancel the trial subscription before the end of the 10-day trial period.





Message 3 of 6
New Member

Re: Should I cancel my youngest credit card(s)?

Thank you!
Message 4 of 6
Highlighted
Legendary Contributor

Re: Should I cancel my youngest credit card(s)?

A consumer can close a credit card, but cannot "cancel" it.

Closing a credit card simply terminates their ability to make new purchases on the account.  It does not cancel the account from their credit report, or remove it from continued scoring under such categories as payment history.

If cosed with a balance, it can continue to be included in your % util scoring, and if delinquent can continue to accrue additonal monthly delinquencies, a charge-off, or a collection.

 

The account is cancelled from credit reporting only if the creditor then decides to report deletion of the account to the CRA.

Message 5 of 6
Super Contributor

Re: Should I cancel my youngest credit card(s)?

What tool(s) were you using to determine your Average Age of Accounts (AAoA)?  If you were using Credit Karma, bear in mind that its front-end "summary" page does indeed use only open accounts in that calculation, but all actual scoring algorithms (FICO, Vantage, etc.) count both closed and open accounts equally, as the other folks on this thread have indicated.

 

Karma is immensely valuable for its reports, but you should ignore what it says about your profile age, its scores, and any advice it gives you, especially if that includes warning you that you don't have enough accounts.

Message 6 of 6
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