Author Topic: Understanding closing cards on credit history age  (Read 3055 times)

CommonCents

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Understanding closing cards on credit history age
« on: July 21, 2014, 10:02:02 AM »
If I have for example, the following credit cards:
Card A open 10 years
Card B open 4 years
Card C open 1 year
Average account age: 5 years

If I close card C, does it get entirely removed from the length of my credit, and my account age then become 7 years?  Or does Card C "freeze" at 1 year, making it harder to age the length of my credit?

The numbers are hypothetical, but I would like to close a card I've had for two years, which I originally opened to save 50k airline miles.  They charge an annual fee, which I talked them out of last year (I went to cancel, they told me they wouldn't charge but I had to ask after the fee hit, I said ok, then they wouldn't remove the charge after all until I got them to access the phone records of our call).  I don't want to deal with that again, but I'd like to know in advance what will happen to my credit length.

(I understand credit score may also vary due to a change in the amount of available credit.)

beltim

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Re: Understanding closing cards on credit history age
« Reply #1 on: July 21, 2014, 10:22:28 AM »
My understanding is that it's crazier than the ideas you had.  What actually happens is that card C remains on your credit report and continues to age, up to 10 years past the closing of your account.  At that point, it drops off your account and only then would your "average account age" drop.

randymarsh

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Re: Understanding closing cards on credit history age
« Reply #2 on: July 21, 2014, 10:59:58 AM »
My understanding is that it's crazier than the ideas you had.  What actually happens is that card C remains on your credit report and continues to age, up to 10 years past the closing of your account.  At that point, it drops off your account and only then would your "average account age" drop.

This is my understanding as well.

Keep in mind that account age only represents 15% of your school. Payment history and amounts borrowed combined are worth 65% so closing 1 card probably won't torpedo your score unless you only have a couple cards.

frugaliknowit

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Re: Understanding closing cards on credit history age
« Reply #3 on: July 21, 2014, 11:07:07 AM »
I've done exactly what you are doing twice (though I have more cards than you) and noticed no difference.  I seriously would not worry about it unless your score is near the fence of where you want it to be (applying for a loan soon?).

CommonCents

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Re: Understanding closing cards on credit history age
« Reply #4 on: July 21, 2014, 11:17:31 AM »
I've done exactly what you are doing twice (though I have more cards than you) and noticed no difference.  I seriously would not worry about it unless your score is near the fence of where you want it to be (applying for a loan soon?).

That's not my actual cards, just an example for easy numbers.

Thanks all!

I'm not planning on applying for a loan soon, although if rates actually did drop we'd consider refinancing our mortgage. 

Ohio Teacher

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Re: Understanding closing cards on credit history age
« Reply #5 on: July 21, 2014, 11:25:43 AM »
My understanding is that it's crazier than the ideas you had.  What actually happens is that card C remains on your credit report and continues to age, up to 10 years past the closing of your account.  At that point, it drops off your account and only then would your "average account age" drop.
This is exactly right from my experience.

arebelspy

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Re: Understanding closing cards on credit history age
« Reply #6 on: August 12, 2014, 08:16:54 PM »
If that's the case, why is it always said that closing old accounts hurts your score by dropping your average age.

It hurts your score, but not for 10 years after closing it?
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Beric01

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Re: Understanding closing cards on credit history age
« Reply #7 on: August 12, 2014, 08:40:17 PM »
If that's the case, why is it always said that closing old accounts hurts your score by dropping your average age.

It hurts your score, but not for 10 years after closing it?

Yeah, this is news to me as well - looking forward to responses.

beltim

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Re: Understanding closing cards on credit history age
« Reply #8 on: August 12, 2014, 09:37:57 PM »
If that's the case, why is it always said that closing old accounts hurts your score by dropping your average age.

It hurts your score, but not for 10 years after closing it?

I haven't seen anyone say that except as a common misconception.