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Posted in Credit Scores

Question By
Trenz24

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I have a question about credit scores.
I have a question about how some potential actions I plan to take will affect my credit score. Currently my score is a 782. I have no late payments, no derogatory marks, no hard inquires, 4% utilization, and 23 total accounts with only 10 active which is an excellent rating across the board for all scoring categories. The only category I'm rated fair in is average age of credit history at 5 years 7 months.

I plan to close 4 of those accounts I don't use. They are actually only two accounts. A Macy's card and a Bloomingdale's card. Both have two lines of credit being store credit and outside store credit. I think that's why they appear as 4 lines of credit on my report. Based on what I've calculated, closing those 4 should increase the average age of my credit history.

As stated, I have 10 total accounts. They are as follows: 13.5, 12.7, 11.3, 5.5, 4.08, 4.08, 2.08, 2.08, .7, .3. Those are all in years. My average credit history is 5 years 7 months. If you add those 10 and divide by 10 you get 5.6 years which works out to 5 years 7 months. 7 months/12 months gives the .6 rounded up that makes up part of 5.6.

My plan is to close the two 4.08s and two 2.08s. This, by my calculations, gives me 6 accounts with an average age of 7.3 years. The six accounts (13.5, 12.7, 11.3, 5.5, .7, .3) / 6 = 7.3 (4 months / 12 months gives the .3) years which converts to 7 years 4 months. Average credit history of 7 years 4 months should move my rating from fair to good.

So the question is, is there any reason closing these 4 accounts would lower my credit score? Even with a reduced overall credit limit from losing the limits on those 4 cards (I figured the math in this already), my utilization will still be in the excellent category rating. Is there any factor I'm missing that would make the score drop? I couldn't find any factors that should make it drop after looking at all categories. I will lose all of that payment history on those 4, but my history is perfect on the other 6. No derogatory marks on any accounts, so that shouldn't matter.

Any advice would be appreciated. Thanks!

Jordan

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Forgot to mention...

I checked the credit score simulator, and it would only let me simulate closing my oldest account at 13 years 5 months which resulted in a potential 1 point drop in my credit score. So, I'm guessing closing those 4 accounts wouldn't be as detrimental as I had wondered if it could be.

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Don't close any account s!!

Better to keep the accounts, even if you don't plan on using them, lock them up safely and let the companies be the ones who might close the account for lack of use. Never be the one to close an account.  The more available credit you have and the longer you've had it, the better.  This also can mean significantly lowering the interest rates on any further loans.

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I don't fully agree with the reply, regarding closure of accounts. I've closed accounts with American Express and Chase because I wanted one of their other cards. I pay off my credit cards every month, and use my cards for almost all my monthly expenses for the rewards. Granted, your score will probably take a ding, but if they're not very long standing accounts-then the score reduction should be minimal. I didn't see credit line amounts listed, so this will decrease your available credit. You might wish to request some credit line increases on cards you utilize regularly before any closures, to offset the closed credit limits.

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