More accounts vs Average age of accounts

More accounts vs Average age of accounts
0.0 0.0 0.0 0.0 0.0 0

#1

I recently opened a new credit card, which increased my number of accounts to 4, but drastically brought down the average age of accounts. Is it better for me to close this new CC? I don’t need it. My existing 3 tradelines would be 2 CCs and a mortgage.

[This discussion thread is from an internal NerdWallet employee conversation, but we thought you, our community members and visitors, may find it interesting. Enjoy!]


#2

For FICO score 8, this is how much each data point impacts your score:

  • Payment History (35%)
  • Debt/Amounts Owed (30%)
  • Length of Credit History (15%)
  • Credit Mix (10%)
  • New Credit (10%)

Based on this, I would think that adding a new line of credit should help your score overall, assuming you are making on-time payments on more open trade lines AND improving your debt / available credit ratio (since I assume you aren’t necessarily spending more).


#3

before considering closing, i would look at the impact on credit utilization, which accounts for more than length of credit history.


#4

You can’t really undo what’s been done. Even if you close the account, it doesn’t disappear from your credit reports and will continue to be factored into your scores. What closing it could do, as Hanah mentioned, is potentially negatively affect your credit utilization.

Overall and over time, this account is likely to have a positive influence on your scores, so I wouldn’t worry about it.