I wrote about canceling my oldest credit card in July last year. At that time, I said:
“I don’t see myself borrowing any money in the foreseeable future. The rate on my mortgage is fixed. I don’t think there is any chance for refinancing unless we have another recession.”
Although I’m not sure whether we have a recession now, the opportunity for refinancing knocked on my door last month. Because I’m refinancing my mortgage, my mortgage broker pulled my credit reports and credit scores. He sent me a copy and here are my scores:
|Equifax||FACTA Beacon 5.0||803||300-850|
|TransUnion||FICO Classic (04)||797||300-850|
|Experian||Fair Isaac (Ver. 2)||780||300-850|
The scores show that canceling my oldest credit card didn’t really hurt my credit. Perhaps my scores were higher before I canceled the oldest card, but who cares. If there was an impact, it was minimal and/or temporary. I didn’t have any problems qualifying for the lowest rate on my mortgage refinance with these scores.
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Dave Hanson says
You write, “The scores show that canceling my oldest credit card didn’t really hurt my credit.”
Actually, the most they can show is that canceling the card didn’t hurt your credit YET. That is do be expected, because the trade line is almost certainly still showing on all three of your bureau reports.
Once this oldest tradeline “ages off” of your credit reports–a process that can take from months to several years, depending on the size of your credit file and other factors–you will most likely see a drop (though likely not a large one).
Harry Sit says
Dave – Thanks for your comments. In the linked post in which I reasoned why I canceled my oldest credit card, I also wrote “I have on my credit report accounts I opened 15 years ago and subsequently closed 12 years ago. This will just add to the list of accounts I opened and then closed.” So it’s going to stay on my file for a long long time. Most of the articles advising not to cancel the oldest credit card imply there’s going to be a negative effect at current time, not the credit scores 10 years from now (who knows what formula they will use 10 years from now?). My experience showed that’s not the case. Note the scores were pulled 6 months after the card was canceled. So they had their chance to recalculate my scores already. Even you said if and when my credit scores drop, it’s likely not a large one. So who cares?
The bottom line remains that canceling my oldest credit card did not affect my ability to obtain the most favorite interest rate. That’s what matters.
TFB, you’re right that columnists who say “closing a card will hurt your credit score” are oversimplifying things. And so are you. Closing a card has no immediate effect (key word being “immediate”) on the age of your accounts, because closed lines are no different that open lines for age purposes. However, you will most assuredly lose the utilization help of the closed card – the available credit is gone. In your case, that didn’t seem to matter because you keep your balances low. This is not always the case and certainly not grounds to suggest closing cards is good advice for everyone.