Bottom line!!

[MenachemMendel]

Disclaimer: I did do quite a bit of research on the forums before posting and since the information is conflicting, i'm posting to get a clearer picture and the bottom line.

So what's the bottom line about closing down a credit card?

I've seen it mentioned that even a closed card "stays in the system" (if someone can please explain how/if it affects the credit differently that an active card in the system) for, I think it was, 10 years?

On the other hand, although it stays in the report, people advise to convert the card to a fee-free card (when applicable), rather than closing it.

I understand that the converting option is in order to keep the credit, but I would like to specifically address the length of credit (credit age) factor.

[AsherO]

Disclaimer: I did do quite a bit of research on the forums before posting and since the information is conflicting, i'm posting to get a clearer picture and the bottom line.

So what's the bottom line about closing down a credit card?

I've seen it mentioned that even a closed card "stays in the system" (if someone can please explain how/if it affects the credit differently that an active card in the system) for, I think it was, 10 years?

On the other hand, although it stays in the report, people advise to convert the card to a fee-free card (when applicable), rather than closing it.

I understand that the converting option is in order to keep the credit, but I would like to specifically address the length of credit (credit age) factor.

If it's one of your older accounts, why risk anything?

[MenachemMendel]

If it's one of your older accounts, why risk anything?

With so many people here being so into credit cards/credit reports, isn't it about time that we find out whether it's a risk, or it's not a problem at all?

[AJK]

I must be missing something.

Length of credit history is 15% of your FICO score.

Closing down a card that has a significant history will negatively affect your score. Period.

Whether that closure is indicated immediately, or (as you suggest) in 10 years (which I find highly unlikely), the result the same: a drop in credit score. The only difference is timing.

[est]

Ive also read every post here about this and i also still have one bottom line question - is there ever a time when you would/should close a card?

[dans fan]

u would and should when you think you maxed out on your credit line (amount that an issuer would lend you), or you dont want to get fried, or you want to churn now or in the future and it would be better if that same card was not active (myb for a while),or evan receive a dif card with a specific bank they might not love the idea that its your 32 card with them the list goes on there is no bottom line each situation needs a shailos chochom

[MenachemMendel]

Closing down a card that has a significant history will negatively affect your score. Period.

You're suggesting that only cards that were in good standing and used significantly affect negatively when closed? What about, say, a Citi AA card that is less that a year old and was used only to spend $1500 to get the bonus miles?

Whether that closure is indicated immediately, or (as you suggest) in 10 years (which I find highly unlikely), the result the same: a drop in credit score. The only difference is timing.

I believe herein lies the key to my question:
If the drop will be in 10 years, would that mean that until the 10 years are up, the (closed) card is actually adding to the credit age? Does a closed card keep on aging?
Or maybe the drop is instant, which is pretty clear to calculate exactly what the credit age will be in that case, and the decision is left to the owner's criteria whether he still wants to close it for reasons such as dans fan mentioned.

[AJK]

You're suggesting that only cards that were in good standing and used significantly affect negatively when closed? What about, say, a Citi AA card that is less that a year old and was used only to spend $1500 to get the bonus miles?

By "significant history" I did not mean "used significantly." I meant that the length of the history, the period the card has been opened, is significant. All things being equal, the shorter the life of the account, the less impact it will have on your credit score. So, closing your a credit card that has been opened a short while ago should have a negligible effect on your credit score.

I believe herein lies the key to my question:
If the drop will be in 10 years, would that mean that until the 10 years are up, the (closed) card is actually adding to the credit age? Does a closed card keep on aging?
Or maybe the drop is instant, which is pretty clear to calculate exactly what the credit age will be in that case, and the decision is left to the owner's criteria whether he still wants to close it for reasons such as dans fan mentioned.

Unfortunately, I cannot speak conclusively as to whether the a closed credit card account is immediately dropped from your credit report, and in the event it isnt, if it continues to "age." I can tell you, however, that, at least with regards to an auto lease, it is not immediately dropped, but the account shows "closed."

I suspect that with a credit card, it would very by issuer, and by credit bureau.

[wired41]

It is my understanding, that the length of time is calculated whether or not it is open or closed for 10 years. The exception, of course, being when you leave it open, in which case, it will show up for over ten years. I see this on my own credit report, since I have three accounts open for 10 years, and 7 accounts opened in the last 3 months. Despite this fact, all agencies calculate my average account opening at over 6 years because I have 30+ closed accounts still on my report.

The other good thing to remember is that if your longest Card history is with Amex, you can always open a new account with them, and close the old one, and the new card will report to the credit bureau being opened at the time you opened your first account with them.

I guess my thought would be if length of time is your concern, which does affect your score, I would not close down my oldest account unless it was Amex. And yes, the closed account does add to credit age, up to ten years. And yes, it keeps aging up to those 10 years.

[AJK]

It is my understanding, that the length of time is calculated whether or not it is open or closed for 10 years. The exception, of course, being when you leave it open, in which case, it will show up for over ten years. I see this on my own credit report, since I have three accounts open for 10 years, and 7 accounts opened in the last 3 months. Despite this fact, all agencies calculate my average account opening at over 6 years because I have 30+ closed accounts still on my report.

The other good thing to remember is that if your longest Card history is with Amex, you can always open a new account with them, and close the old one, and the new card will report to the credit bureau being opened at the time you opened your first account with them.

I guess my thought would be if length of time is your concern, which does affect your score, I would not close down my oldest account unless it was Amex. And yes, the closed account does add to credit age, up to ten years. And yes, it keeps aging up to those 10 years.

If that's true, someone's credit score is going to be one really unhappy camper when that account disappears after 10 years and the average age of open accounts plummets (along with the score).

[wired41]

Thats why you keep opening new acccounts 

[Smokey Joe Robinson]

Thats why you keep opening new acccounts 

see churning is good after all, even for simpletons that dont know how to take advantage of great offers over and over again.

[scwam]

I still argue that closing a card takes that card out of the average age calculations. I've seen it happen to my credit, I've seen it happen to my sisters credit last month, and I believe that when I close my 2 citicards  I will see my average age rocket upward the following month. Those cards being younger than my average age are holding my average age down. So I would argue that closing a card that is less than your average age of each bureau would benefit your credit (not considering the increased utilization from lost lines). Doing the opposite would hurt your credit. I'll report back on this once I close them.

Top pic me: Closure of 15 year old USAA card I was a coapp on with mother
Bottom pic: Sister after closure of a card ~3 years old last month.

[AsherO]

I still argue that closing a card takes that card out of the average age calculations. I've seen it happen to my credit, I've seen it happen to my sisters credit last month, and I believe that when I close my 2 citicards  I will see my average age rocket upward the following month. Those cards being younger than my average age are holding my average age down. So I would argue that closing a card that is less than your average age of each bureau would benefit your credit (not considering the increased utilization from lost lines). Doing the opposite would hurt your credit. I'll report back on this once I close them.

Top pic me: Closure of 15 year old USAA card I was a coapp on with mother
Bottom pic: Sister after closure of a card ~3 years old last month.

What service generates those charts (and what looks like pulls more often than monthly)?

[scwam]

Credit Karma.

[txtmax4]

Disclaimer: I did do quite a bit of research on the forums before posting and since the information is conflicting, i'm posting to get a clearer picture and the bottom line.

So what's the bottom line about closing down a credit card?

I've seen it mentioned that even a closed card "stays in the system" (if someone can please explain how/if it affects the credit differently that an active card in the system) for, I think it was, 10 years?

On the other hand, although it stays in the report, people advise to convert the card to a fee-free card (when applicable), rather than closing it.

I understand that the converting option is in order to keep the credit, but I would like to specifically address the length of credit (credit age) factor.

This is a very good question, indeed. I've been trying to figure it out for a long time, unfortunately I don't have enough time to look into it properly.
If anyone has enough time to research this and get the real deal or the "bottom line' that would be great.
I suspect results may vary depending on issuer/bureau.
Ultimately credit age represents just 15% of your score but it's good to know the real impact of things anyhow.

[txtmax4]

Credit Karma.

Hmmm, can you tell us what FICO says once you close the accounts?