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BobWang

The Master Should I Close New Accounts for AAoA Purposes Thread

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No, because standard FICO scoring includes both open AND closed accounts in AAOA calculations.

The key series to look at is the Light Blue “0 Open” accounts line.
Even if you open a CC, and immediately close it, it will continue reporting, usually for 10 years.
In fact, if it continues to report for 20 years, just that one closed account will result in a FICO of 740.

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What about fear of creditor closing for lack of use? isn't 'closed by request of consumer' better for the score than other types of closure (or perhaps that is just a urban legend..)

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Urban Legend on the reason for closure part, reality on the closed for inactivity part.

 

FICO scoring doesn't care WHY an account was closed, or by whom.

 

FICO DOES care about things like lates and past due payments that may lead to closure.

 

On manual review "Closed by Grantor" may look worse than "Closed by Consumer Request", but FICO scoring doesn't care. :D

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So, if you have a good enough FICO to avoid manual reviews, it's nothing someone should really worry about. :D

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Well, anybody looking at my reports will see a BUNCH of AmExes closed by AmEx. :P

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So, if you have a good enough FICO to avoid manual reviews, it's nothing someone should really worry about. :D

Lender pulls the report and score with an app. Even with the highest scores 780+, manual reviews of the report are common -especially if one has a large file or existing accounts with said lender. That's why instant approvals often decrease as ones file grows. But, with high scores the manual reviews often yield positive results of approval with higher limits...

Edited by TrevorHere

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Positive closed accounts are usually reported for 10 years, some longer, but count on them dropping off

 

OpenAcctsDropat10Years_zps54f9ba4b.jpg

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As it indicate that you are selective and not in need for credit.. Is closing accounts viewed favorably by lenders during manual review. I read on another post that some users experienced CLIs as a result of closing accounts.

 

Can it also be used to justify inquiries during manual review?

 

Does average CL play any part in determining new CLs?

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It usually doesn't help to close positive accounts.

 

My personal opinion is to stay away from issuers who want accounts closed.

 

Let's say someone has 5 small limit cards they want to close.

 

Well, in 10 years those cards would be adding 50 years of age to AAOA calculations.

 

In 20 years those cards would swamp any new card added as far as AAOA is concerned.

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The best way to handle inquiries is to be judicious in spreading apps across the 3 CRAs.

 

Even though TU inquiries may have a short life-span, the new "Enhanced" reports have seen them return.

 

Highest credit limit is more of a factor, especially on manual review.

 

That's why NFCU is so valuable in rebuilding credit.

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The best way to handle inquiries is to be judicious in spreading apps across the 3 CRAs.

 

Even though TU inquiries may have a short life-span, the new "Enhanced" reports have seen them return.

 

Highest credit limit is more of a factor, especially on manual review.

 

That's why NFCU is so valuable in rebuilding credit.

Good points Bob, how about this scenario?

 

NFCU has been finnicky as of late with unsecuring the cards lately, some report they get it, some say they are told it is not in effect anymore...

We all know that NFCU will approve you for another unsecured card after some time with the secured while ignoring the secured card.

If when my year is up for my opening of my Nrewards Secured, if it is not unsecured and I then open a new unsecured cashrewards card, would it hurt to go ahead and close the secured that would have only been opened a year?

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Secured cards, and cards with AF are exceptions to the rule of not closing positive accounts.

 

If a card is costing you money, and is not a big factor in AAOA, I'd go ahead and close it.

 

 

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If you do have a card that is costing you money, but is a factor in AAOA I'd request the issuer to downgrade you to a no-fee card., thus maintaining your account age with no fee.

 

I'm not sure if the downgrade product change would be better than just consolidating your limits onto an older no-fee card (the latter is what I've done with Chase)

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In fact, if it continues to report for 20 years, just that one closed account will result in a FICO of 740.

 

I don't understand this - are you saying that if you close a positive account, it will max out your score at 740 ?

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In fact, if it continues to report for 20 years, just that one closed account will result in a FICO of 740.

 

I don't understand this - are you saying that if you close a positive account, it will max out your score at 740 ?

 

According to the FICO Estimator, the max range for a "Perfect" file with NO open accounts is 715-765 at 20 years.

 

Most likely, that account will no longer generate a FICO score at 10 years, when the last positive account drops off, for a score of 705-755.

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BTW, if it isn't clear, when I run my scenarios,

 

I use the best possible numbers, except for the variable under consideration.

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The FICO score spreadsheet is making my head hurt. So, could someone please help.

 

Since I just got approved for a $10,000 Visa from USAA and a $12000 from NFCU, I wanted to close 2 of my older, lower limit cards (that have an annual fee) and currently have a 0 balance. These were from 5.1 years ago, opened the same day.

 

$250 limit on Total Visa Card (Plains Commerce Bank): annual fee $48.00;

$600 limit on Legacy Visa Card (First National CC). Annual fee $48.00 and monthly maintenance of $6.00 even if I don't have a balance.

 

I had no lates EVER on these.

 

I have read if they are closed, they will still report positive on my report. I want them gone because they have such a small limit compared to my newer cards (even my Chase Amazon Visa, which now has a $3,300 limit).

 

I have requested a CLI on Total Visa. They sent a letter in the mail for me to fill out; said it was the law now to have the request written. I also requested if they do a hard or soft pull and they have yet to answer that question.

 

Legacy Visa will give me an increase of $100 for $25 dollars; My original limit was $500, so over 5 years I have received one CLI

 

Are these cards even the least bit valuable to me anymore?

Edited by Peaches69

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The FICO score spreadsheet is making my head hurt. So, could someone please help.

 

Since I just got approved for a $10,000 Visa from USAA and a $12000 from NFCU, I wanted to close 2 of my older, lower limit cards (that have an annual fee) and currently have a 0 balance. These were from 5.1 years ago, opened the same day.

 

$250 limit on Total Visa Card (Plains Commerce Bank): annual fee $48.00;

$600 limit on Legacy Visa Card (First National CC). Annual fee $48.00 and monthly maintenance of $6.00 even if I don't have a balance.

 

I had no lates EVER on these.

 

I have read if they are closed, they will still report positive on my report. I want them gone because they have such a small limit compared to my newer cards (even my Chase Amazon Visa, which now has a $3,300 limit).

 

I have requested a CLI on Total Visa. They sent a letter in the mail for me to fill out; said it was the law now to have the request written. I also requested if they do a hard or soft pull and they have yet to answer that question.

 

Legacy Visa will give me an increase of $100 for $25 dollars; My original limit was $500, so over 5 years I have received one CLI

 

Are these cards even the least bit valuable to me anymore?

Not in my humble opinion, ditch them both and don't look back!

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Haha. Then, that is the task for this week then!!!! I need to get all my ducks in a roll. Deploying to Afghanistan in June and I want to make sure I have done all I can for credit repair before then so that while I am gone, all I have to worry about is allowing my new awesome credit lines to get some age.

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Goal: upon redeployment in 1 year, be able to qualify for mortgage; I want to have most all my cards at a 0 balance before I leave (I know that there will be 2 still having a balance, but I can pay that off pretty fast since I won't be paying rent or utilities while I am gone); By having all these cards paid down/off, I can save those monthly payments....more of a down payment I can make, less interest rate. Five years until I am eligible for retirement...it's right around the corner. :o)

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Think about putting all your credit cards on AutoPay for at least the minimum payment.

 

You never know when you might not have Internet access for months.

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I have all of them on autopay already. I was thinking about the effects of paying off one of those 2 cards with the NFCU card....NFCU has lower interest and also using the NFCU to pay off a $4200 personal loan...then using autopay directly to NFCU...at least there would be activity on the NFCU card...the total amount that I would be paying off/transferring would be $6500.

 

What are your thoughts? Should I just leave them alone, as is or switch to NFCU?

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