Credit Cards

[Merged] Cancelling oldest credit card

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  • Mar 5th, 2019 10:11 pm
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Sr. Member
Mar 15, 2011
559 posts
193 upvotes
Toronto

[Merged] Cancelling oldest credit card

Hello,

I've read on here that cancelling my oldest cc is not a good thing. My oldest is a cibc card.

I just ran the scotia creditview dashboard, and the estimate shows no impact of cancellation. ( transunion score).

Anyone who works in this business, is it really a big deal?
80 replies
Deal Addict
Apr 21, 2009
2723 posts
2772 upvotes
Toronto
Sure it may not have an impact on your SCORE but it will significantly reduce the length you've had a credit history for, once it falls off your credit report in a couple of years. If your next oldest card is many years AFTER you opened your first card.

My first credit card was from TD like 8-10 years ago, haven't used it in about 7 years, nor do i bank with TD anymore. But I still kept the card because the longer your credit history is, the better.

Keep the card, and if it has an annual fee, just downgrade it to a free card. Toss it in a drawer, and forget about it.
Sr. Member
Aug 5, 2018
566 posts
872 upvotes
You do not receive any benefits of cancelling the card.
I don't understand your motive.
If it's no annual fee, you don't have to do any work to keep it.
If not, try to downgrade if possible, or ask for retention offers.


One of the 3 main factors in credit score is how many cards you have and how long you have had them.
Indeed, cancelling a card does not fall off your credit report immediately, but it will have big long term effects.

For example, it's impossible to get a score above 833 without having about 5 cards and average age of the accounts about 3 or more years.
On the other hand, you can see yourself that 20% of Canadians have scores above 833.
(Apparently, there are quite a few people on RFD with scores above 890.)

By cancelling the card, you would just shoot yourself in the foot, as you'll not be getting above 833 for at least 3 more years to come.
Deal Addict
Feb 9, 2013
1912 posts
1314 upvotes
Mississauga
It depends on how old your other cards are. Say if your oldest card is 10 years, and your second oldest card is 1 year, your average is 5 years. But if you cancel your oldest card, then your credit history is only 1yr.
On the other hand, if your second card is 9 years, and you cancel your oldest card, then your credit history is still 9 years which is minimal impact.
However, cancelling your card does not take immediate impact. I think 7 years? So even if your second oldest card is 1 year, after 7 years when your oldest card gets wiped, the second oldest is already 8 yrs.

In summary canceling oldest card does impact your credit history, but it won't take effect for 7 years (or in those lines), by that time your other cards will have accumulated enough history.
Sr. Member
User avatar
Jul 25, 2018
784 posts
1241 upvotes
Milton, ON
To mirror what others have said, there are no financial benefits to canceling your oldest CC and it doesn't hurt to keep it. A large portion (I believe 35%) comes from length of credit.

That being said, there may be other motivators for canceling an old CC. I, for example, had an 8 year old CIBC CC that I recently cancelled because: 1) I hate Simpiii Financial, which is owned by CIBC. Long story short, horrid system of approving accounts and they gave me the runaround for 2 months before I cancelled my application. Best way to get back at a business is to no longer give them yours, and go to their competitors (PCF ftw). 2) I had 9 CCs and am in the process of simplifying my wallet. 3) I never use it.

So if it bothers you in some way that outweighs the negatives of canceling (lower credit score, but may be immaterial), go ahead and cancel. If you're in a tight spot and may need a loan soon, perhaps it would be better to keep it. Basically, it may or may not be a big deal, there are so many things that affect a credit score..
Deal Addict
Aug 18, 2018
1968 posts
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510 represen'
It's too hard to say what the exact impact will be without knowing the details of your credit file. But in VERY broad terms, if you have a few other cards (3 or more) that are around the same age as your oldest card (within 2 years), and provided you have credit utilization under control, then cancelling the oldest card will have little immediate impact. And as someone pointed out, closed cards stay on your account for 7 years and possibly longer. I have a closed Scotiacard from 2013 that I'm still seeing on my TU report when I log into Creditkarma. So realistically speaking, even the long term effects are quite minuscule if you have 3 or more cards (not counting the one you close).
Deal Addict
Nov 9, 2017
1121 posts
162 upvotes
xx1what wrote: For example, it's impossible to get a score above 833 without having about 5 cards and average age of the accounts about 3 or more years.
Interesting. Can you please elaborate how the calculations for 833 and 5 cards work?
Sr. Member
Aug 5, 2018
566 posts
872 upvotes
snowhite445 wrote: Interesting. Can you please elaborate how the calculations for 833 and 5 cards work?
Based on estimates done on the credit scores of US, 25% of your credit score accounts for how many cards you have and how long you have had them.

Having more than 15 cards with average age more than 5 years, would give you a close to perfect score in this category.

Having less than 2 cards with average age less than a year, would give you a score of "very poor" in this category.
Deal Addict
May 16, 2017
2807 posts
3662 upvotes
xx1what wrote:

By cancelling the card, you would just shoot yourself in the foot, as you'll not be getting above 833 for at least 3 more years to come.
And what is so magical about 833?

As a fairly robust churner, I've lately tended to cancel cards, even those with no fee; just because I don't want to track them and would rather boost credit line on some individual accounts. Yes, my score dropped and bounces around in the 770-790 range with a couple of brief excursions above and below.

The question is what difference has it made? None, that I can discern. I've got an overall stellar credit record going back more than 30 years. Currently have 78 accounts on record with transunion, 7 open (credit cards, secured and unsecured LOCs; paid-off mortgages).

Also, that credit history for even a closed account is a factor. My oldest credit card history is now less than 2 years and my oldest other open account is less than 4 years (secured LoC).
Deal Addict
Sep 24, 2018
2366 posts
1245 upvotes
GreenFinGirl wrote: Hello,

I've read on here that cancelling my oldest cc is not a good thing. My oldest is a cibc card.

I just ran the scotia creditview dashboard, and the estimate shows no impact of cancellation. ( transunion score).

Anyone who works in this business, is it really a big deal?
Simply put bad idea, you lose the history so average age of accounts will go down. Just leave it in a drawer and let it die.
Sr. Member
Aug 5, 2018
566 posts
872 upvotes
robsaw wrote: And what is so magical about 833?

As a fairly robust churner, I've lately tended to cancel cards, even those with no fee; just because I don't want to track them and would rather boost credit line on some individual accounts. Yes, my score dropped and bounces around in the 770-790 range with a couple of brief excursions above and below.

The question is what difference has it made? None, that I can discern. I've got an overall stellar credit record going back more than 30 years. Currently have 78 accounts on record with transunion, 7 open (credit cards, secured and unsecured LOCs; paid-off mortgages).

Also, that credit history for even a closed account is a factor. My oldest credit card history is now less than 2 years and my oldest other open account is less than 4 years (secured LoC).
Nothing magical about 833.

This is simply the number that Transunion gives out: 20% of Canadians are above 833, 40% of Canadians are above 790, 60% of Canadians are above 743.
Sr. Member
May 26, 2009
588 posts
789 upvotes
Calgary
xx1what wrote: For example, it's impossible to get a score above 833 without having about 5 cards and average age of the accounts about 3 or more years.
That's not true. In the fall, I only had 3 active cards and a TU score of 890.
Sr. Member
Aug 5, 2018
566 posts
872 upvotes
jtfrogger wrote: That's not true. In the fall, I only had 3 active cards and a TU score of 890.
Good data point.

I would think your average age of account is high.
Also, number of credit accounts doesn't only include credit cards, so maybe you have other credit accounts?
Sr. Member
May 26, 2009
588 posts
789 upvotes
Calgary
xx1what wrote: Good data point.

I would think your average age of account is high.
Also, number of credit accounts doesn't only include credit cards, so maybe you have other credit accounts?
Yes, the average age of those is probably over 10 years. And yes, there are other credit accounts, a mortgage and cell bill.

But given that accounts don't fall off that quickly, it is all my older accounts that are helping my credit substantially. I still see trade lines that haven't reported since 2001, and have been closed for longer than that.

And even with the four hard hits in the last few months and significantly dropping the average age of my accounts with a few new cards, I am still at 874. I just checked today, and I just dropped from 881 because of a hard hit today from a CLI request from MBNA.
Deal Addict
Aug 18, 2018
1968 posts
1573 upvotes
510 represen'
robsaw wrote: And what is so magical about 833?

As a fairly robust churner, I've lately tended to cancel cards, even those with no fee; just because I don't want to track them and would rather boost credit line on some individual accounts. Yes, my score dropped and bounces around in the 770-790 range with a couple of brief excursions above and below.

The question is what difference has it made? None, that I can discern. I've got an overall stellar credit record going back more than 30 years. Currently have 78 accounts on record with transunion, 7 open (credit cards, secured and unsecured LOCs; paid-off mortgages).

Also, that credit history for even a closed account is a factor. My oldest credit card history is now less than 2 years and my oldest other open account is less than 4 years (secured LoC).
I think this is what a lot of people get hung up on. Over a certain threshold, your score really doesn't do anything for you anymore. Sure if you're applying for new credit soon, it might be wise to hold off on doing anything that would negatively affect your score. Otherwise if nothing of that sort is on the horizon, just use your cards like normal, pay them off before the due date, keep utilization under 30%, and you're good to go.
Sr. Member
Feb 1, 2018
975 posts
1119 upvotes
Montréal
The paradox of credit scores: You can't get over a certain threshold unless you have a mortgage. But the main reason most people care about their credit score is if they plan to apply for a mortgage.

I rent. So despite near-perfect use of credit in my life I tend to get the "insufficient mortgage experience" ding, and my credit score doesn't ever climb past the 825 mark.

All this to say, there are more factors than just the average age of your credit. But if you can downgrade the card to a no-AF version and stick it in a drawer, it's usually better than cancelling your oldest card.
Deal Addict
Nov 9, 2017
1121 posts
162 upvotes
seriesofcontradictions wrote: The paradox of credit scores: You can't get over a certain threshold unless you have a mortgage. But the main reason most people care about their credit score is if they plan to apply for a mortgage.

I rent. So despite near-perfect use of credit in my life I tend to get the "insufficient mortgage experience" ding, and my credit score doesn't ever climb past the 825 mark.

All this to say, there are more factors than just the average age of your credit. But if you can downgrade the card to a no-AF version and stick it in a drawer, it's usually better than cancelling your oldest card.
My mortgage lender (not a big 5) never reported my mortgage in the last 6 years. Is it good to get them to report it? How can I get them to report it?
Deal Addict
Nov 9, 2017
1121 posts
162 upvotes
xx1what wrote: Based on estimates done on the credit scores of US, 25% of your credit score accounts for how many cards you have and how long you have had them.

Having more than 15 cards with average age more than 5 years, would give you a close to perfect score in this category.

Having less than 2 cards with average age less than a year, would give you a score of "very poor" in this category.
I think I will never understand why the credit score is so hard to talk about clearly. Why would there be a need to do research and then find out that the 25% sample had 5 cards or more and score of 833 and therefore at least 5 card is needed to reach that? Why not show it in a simple get 5 cards (100 points each = 500) and 333 from other bank accounts and it makes it 833. Everyone on this forum says it's really hard to calculate it - why?
Deal Addict
Aug 18, 2018
1968 posts
1573 upvotes
510 represen'
seriesofcontradictions wrote: The paradox of credit scores: You can't get over a certain threshold unless you have a mortgage. But the main reason most people care about their credit score is if they plan to apply for a mortgage.

I rent. So despite near-perfect use of credit in my life I tend to get the "insufficient mortgage experience" ding, and my credit score doesn't ever climb past the 825 mark.

All this to say, there are more factors than just the average age of your credit. But if you can downgrade the card to a no-AF version and stick it in a drawer, it's usually better than cancelling your oldest card.
Wanna know what's even more ironic? As soon as you fulfill your mortgage obligation and pay it off like any responsible person does, your score instantly takes a ding because you have no "open installment accounts". Wtf...

Oh and it doesn't have to be a mortgage, any installment loan will do. Your score is being penalized because 10% of it is for "credit mix", and if you only have one type of credit (revolving credit aka credit cards), then you get dinged severely in that category.
snowhite445 wrote: I think I will never understand why the credit score is so hard to talk about clearly. Why would there be a need to do research and then find out that the 25% sample had 5 cards or more and score of 833 and therefore at least 5 card is needed to reach that? Why not show it in a simple get 5 cards (100 points each = 500) and 333 from other bank accounts and it makes it 833. Everyone on this forum says it's really hard to calculate it - why?
Because the formula for calculating the score is proprietary and a closely guarded industry secret, and the most we could do is collect a whole bunch of different data points and try to make some sense out of them.

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