I want to cancel my oldest card -- advice?

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Brad Bishop
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Re: I want to cancel my oldest card -- advice?

Postby Brad Bishop » Fri Feb 05, 2016 10:42 am

takeshi wrote:Despite the popularity of the meme, you don't have to hoard credit for good credit. I don't keep anything open that is of no use to me and my FICO 8's are all in the low 800's.

I think that this is key. Some people over-think/over-calculate what they do with regards to credit cards.

If you just:
- pay your bills on time
- keep your debt low (no debt even better)
- don't go nuts on applying for new cards

...then you're pretty much OK. All you're trying to be is responsible. If you do nutty things (like try to open 5+ cards at once or maybe max out your current credit cards) then you look irresponsible. If you close an older account that you really no longer have the need for then that's not irresponsible.

Ultimately the banks just want to be paid back and make a little money in loan to you. The riskier you appear to them the more you're going to pay.

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Re: I want to cancel my oldest card -- advice?

Postby kdm31091 » Fri Feb 05, 2016 10:49 am

I think people do get way too wrapped up certain things with regards to cards. Like Brad says, pay your bills, don't app for a bunch of cards at once, and keep debt low or nonexistent and you won't have any issue.

The things that some people really fixate on with FICO scoring -- not closing oldest account, or mix of credit (some even open installment loans they don't need to enhance their mix of credit) -- are things that have a fairly small impact. Utilization and payment history are your biggest and most important factors. Utilization is fluid and changes monthly so not a whole lot of point in worrying about it all the time (IMO), so you're left with simply maintaining a solid, stable payment history. Lenders like stability, which also implies to me that one shouldn't open a ton of accounts every year, etc.

Anyway, AAOA is 15% of your score, but that does NOT mean that an old card falling off a decade from now will tank your score 15%, as your existing accounts will be much older. So the impact is likely to be fairly small, and not worth worrying about. Notice also we see very few people posting "omg, my old account fell off, my AAOA tanked and my score plummeted!"... realistically, anytime I've applied for cards and my AAOA went down, it hurt me by a few points at the most. Of course, that won't be the same for every file, but the point is that I think AAOA is something people worry too much about. I'm not going to keep accounts I have no use for just to please a scoring model when it's undetermined how much real impact it will have. YMMV.

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