"Don't Close Your Oldest Card" a Common Credit Myth?

[Anonymous]

It's worth observing that even on FICO, at least some of the models consider the age of revolving accounts separately: i.e. your Age of Oldest credit card and your Average Age of your cards (excluding loans).

I get seperate negative reason statement calling these issues out on my score: one reason statement for age-related factors (for all accounts) and another statement confined to revolving accounts.

Both statements assert that the problem could be Age of Oldest and/or Average Age.

For all accounts my AAoA is > 8.0 and my AoOA is > 17.0

For revolving only my AAoA and AoAo are less (15 for AoOA and I haven't tried computing it for AAoA).

The general account statement is #1 and the revolving specific is #2 (on order of severity of score impact).  This is my EX FICO 8 score which is 844.

Can someone direct me to a good spreadsheet for calculating AAoA and AoOA?  I really should put all my accounts in just so I could give you 100% confirmation on these numbers.  I think ABCD created one and so have several other people.

[bondsandloan]

What happens if you combine oldest card, Chase Amazon CL (15 years old) with newest card CSR CL (1 month old) and keep the CSR? Combined CL is great. But is it now 1 account with age 15 years? Hence improving your AAoA & AoYA? Or is it one account with age 1 month?

[rbentley]

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@bondsandloan wrote:
What happens if you combine oldest card, Chase Amazon CL (15 years old) with newest card CSR CL (1 month old) and keep the CSR? Combined CL is great. But is it now 1 account with age 15 years? Hence improving your AAoA & AoYA? Or is it one account with age 1 month?

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My understanding that is that with Chase (and most CCC's) it would become one account with age 1 month.  The combining works to combine your CL's but not your account age.  AmEx use to allow backdating which meant that you could open new card and combine to the new card and keep all your history.  They no longer do that.  You do keep your old history with Chase though if you PC to another card.  

[Anonymous]

Thank you for posting this!

I've been considering closing my oldest, which is a Cap1 quicksilver. I opened it as a Platinum last year, then did a PC. I believe it is destined for a low limit, as my score was very low when I opened it, so maybe it is 'bucketed?"

Also have two other cards that were opened six months later, so it shouldn't impact the AAOA terribly, from what i've read in the responses here.

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@rbentley wrote:

One of the most common bits of credit advice is to never close your oldest card.  The reason usually stated is because it will hurt your AAoA, which makes up 15% of your score.  But inherent in that advice is the assumption that a closed account does not contribute to your AAoA.  Most on here know that it does continue to factor in, although not grow.  A positive account will remain for 10 years, a negative one, only seven.  In that time your other open accounts should have aged to more than make up the difference.

So if you have a significantly oldest account, especially one with an AF or bucketed limit, is there any good reason not to close it?  Isn't the "Don't close your oldest account", just a myth?

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[K-in-Boston]

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@rbentley wrote:

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@bondsandloan wrote:
What happens if you combine oldest card, Chase Amazon CL (15 years old) with newest card CSR CL (1 month old) and keep the CSR? Combined CL is great. But is it now 1 account with age 15 years? Hence improving your AAoA & AoYA? Or is it one account with age 1 month?

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My understanding that is that with Chase (and most CCC's) it would become one account with age 1 month.  The combining works to combine your CL's but not your account age.  AmEx use to allow backdating which meant that you could open new card and combine to the new card and keep all your history.  They no longer do that.  You do keep your old history with Chase though if you PC to another card.  

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That is 100% correct.  There would be no change to AAoA as the older card would continue to report as a closed account until it fell off, up to a decade later.  As a rule, I'd always prefer to keep the older card but generally Chase only allows product changes within certain families of cards.  I'm actually curious what product change(s) led to @bondsandloan ending up with a 15 year-old Amazon card.

[Anonymous]

Hi GeePee.

The term "bucket" is almost exclusively used here on the forums to refer to an entire credit profile belonging to a particular "scorecard" which is a grouping of similar profiles together for scoring purposes.

Bucket is almost never used here to mean an upper ceiling for a credit limit imposed by a particular CC issuer.  (E.g. my credit union doesn't seem to be willing to raise the limit of my card past $1000 -- say.)

That's just an FYI so you can communicate best with the folks here -- otherwise they will likely misunderstand you.

As others have mentioned, closing a card never affects one's AAoA, assuming the closed account stays on the report.  Nor does it affect one's Age of Oldest Account.

I would personally not close that account (assuming it has no annual fee) until your second oldest account is at least 4 years old.  There's a small chance that closing it could cause it to be deleted outright, in which case your Age of Oldest would drop.

[Anonymous]

Great info posted in this thread by BBS and others. If you're aiming for the highest FICO score possible, I'd strongly discourage you from closing your oldest account. As far as I'm aware, there hasn't been a documented case of anyone attaining 850 with an AoOA < 17 yrs.  If 850 isn't important to you, then by all means close it for whatever reason(s) you deem necessary. 

[Anonymous]

I think that maintaining an AoOA of 17+ years is a very smart move and would suggest that people at least give that factor some thought when closing accounts.  Basically if your AoOA is coming from a closed account, it's a good idea to look ahead to the point when you'd expect it to fall off (typically 10 years after closure) and see what type of AoOA drop you'll experience at that time.  Perhaps your 17 year AoOA will be 22 years at the time that 22 year old account falls off, but your next oldest account at the time will be 19 years.  If that's the case, no bubbles no troubles, as your AoOA will still be > 17 years.  If that 19 year old account is also closed, it would be good again to look ahead to the point where you'd expect that one to drop off. 

[rbentley]

This article came up in my newsfeed today on this very issue.  Interesting, clarifing information from Rod Griffin, the director of consumer education and awareness at Experian.

https://www.huffingtonpost.com/entry/closing-credit-card-credit-score_us_5b9fffafe4b046313fbdec0f

[Anonymous]

There's some definite mis-information in that article.  One common one is the whole keep your utilization under 30% argument and the article suggests that doing so will keep you from incurring a score drop.  We all know however that crossing the 8.9% threshold to a value anywhere from that threshold up to 30% is going to result in a score drop, so "under 30%" is not going to be ideal for scoring.

A completely new one that's 100% false in that article is the part where he talks about closing a CC and the potential aggregate utilization increase realized due to losing the credit limit from the now closed account.  He states that this can drop your score, which is true, but then suggests that your score usually rebounds in a couple of months?  That makes no sense.  If your score drops due to a change in utilization, the only thing that's going to cause those points to return is lowering your utilization back to where it was.  The element of time here is a non-factor and it's misleading and flat out incorrect to suggest that in a few months your scores would improve.