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Closing Accounts - Impact on Credit Score

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Aug 7, 2013
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Closing Accounts - Impact on Credit Score

I'm about to close down a BMO Credit card that I have not used in forever as I no longer deal with them at all. The credit account is a Mastercard and originally opened in 2001. It's the longest serving card I have on my profile. I have other cards with the following issue dates as well:

- HBC Capital One (June. 2012)
- Amex Cobalt (Sept. 2017)
- TD CB Visa (Feb. 2019)
- TD ICB Visa (Aug. 2013)
- TD Unsecured LOC (Jun. 2014)
- Scotia HELOC (Apr. 2020)

If I close my BMO account, can I expect for it to negatively impact my score. The limit on the card is $15,000 and currently my total available credit across all accounts is $342,500 with $200k of this via the Scotia HELOC. I don't carry balances on any of these credit facilities. I just want to ensure I won't be significantly impacted by shutting down the BMO credit card. Any feedback would be appreciated.
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Nov 9, 2005
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Hi there, just closed 2 cards (1 BMO) last month - to my surprise no negative impact and my score actually went up! (YMMV)
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May 16, 2017
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Will NOT have a significant impact given the number of cards/age and utilization.
Newbie
Oct 7, 2020
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robsaw wrote: Will NOT have a significant impact given the number of cards/age and utilization.
Are you sure? It will drop average age from almost 7 years to around 4.5 years. Wouldn't be a huge impact, but maybe something like 5 points?
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Jan 4, 2011
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Have a look at this thread: do-closed-accounts-count-average-age-account-2041761/

Based on that thread and multiple other DPs, closed accounts still contribute to your AAoA until they fall off your credit file. Until that time, the impact, if any, will be essentially from lower available credit.
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BCisBeautiful wrote: Are you sure? It will drop average age from almost 7 years to around 4.5 years. Wouldn't be a huge impact, but maybe something like 5 points?
It’ll likely be more than 5 points.
In my experience, closing long time accounts, including my oldest, have yielded on average 15-25 point drop.
This of course will vary person to person, depending on a range of factors, including the limit on the card being closed, and whether or not it was a “stale” trade line anyway.
Credit cards sitting idle and not used, go stale after a while and don’t contribute to your credit score anymore doe to lack of payment performance being reported.
And as already mentioned, these closed accounts still factor in your average age, which is highly over rated anyway.
Payment performance and amounts owed are the primary things to keep focus on, the rest is peanuts.
Newbie
Oct 7, 2020
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coolintheshade wrote: In my experience, closing long time accounts, including my oldest, have yielded on average 15-25 point drop.
...
And as already mentioned, these closed accounts still factor in your average age, which is highly over rated anyway.
I had forgotten that closed accounts still contribute to average age (for another 10 years, IIRC). If that is the case, how would closing an account lead to a score drop? I would think that would only be the case if it drove utilization up, so if utilization is zero, it shouldn't matter.
Jr. Member
Mar 19, 2018
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I feel like I've seen a lot of posts recently with people talking about closing credit card accounts or asking about the impact of closing an account on their credit scores. I don't really understand why so many people want to do this? Like what exactly is the benefit they're trying to achieve by closing the account? I'm actually curious what the rationale is because I don't really see any huge benefits at all to doing this.

The only truly valuable thing I can think of is if you're closing a credit card account at a bank like Scotiabank where they have terms and conditions which preclude people from benefiting from their sign up bonuses if they've held any Scotia credit card within the last two years. So you close the account so that in two years you can take advantage of their sign up bonuses again. But I'm pretty sure they're the only bank that does this. For other banks like TD you benefit from having multiple credit lines to product switch in and out of.

The only other benefits might be the small worry of losing track of an account and someone making fraudulent charges on it and maybe also the small inconvenience of having to keep track of cards you don't use and having to maintain them by making a purchase every year. Both of which are pretty negligible hassles imo. I think I have close to 20 credit cards. I probably use about 6 of them regularly (Rogers WE, CTWE, PCWE, TDCBVI, Simplii, Amazon and whatever cards I'm churning and using for BTs). The others are drawered and it's really not that difficult to maintain them. Once a year I go to Dollarama and buy a few items on each card or more recently go to Walmart and use the self checkout to process one payment on each card. Scan item, tap card, print receipt. Rinse and repeat.

Unused cards are not hard to maintain and you keep your utilization low by having the extra credit. If the bank for your drawered card ever offers a new credit card product that's competitive you can product switch easily into the new card or even open the new card and then transfer the drawered cards CL into it thereby having a larger credit limit much faster. Maybe down the road you get a ULOC with the FI and then can transfer your drawered cards CL into that account. Maybe the FI starts offering BTs at great rates so you can use the drawered card for that later. Maybe you want to get a mortgage and the FI with the drawered card is offering a great mortgage rate so having a card open with them would make it easier to get this mortgage because you already have a relationship with the bank.

I just see so many benefits to just maintaining all cards and so few to closing that it surprises me to see so many people asking about closing cards?!! What hidden benefit am I missing here? lol I just don't get it.
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gymchamp wrote: I feel like I've seen a lot of posts recently with people talking about closing credit card accounts or asking about the impact of closing an account on their credit scores. I don't really understand why so many people want to do this? Like what exactly is the benefit they're trying to achieve by closing the account? I'm actually curious what the rationale is because I don't really see any huge benefits at all to doing this.

The only truly valuable thing I can think of is if you're closing a credit card account at a bank like Scotiabank where they have terms and conditions which preclude people from benefiting from their sign up bonuses if they've held any Scotia credit card within the last two years. So you close the account so that in two years you can take advantage of their sign up bonuses again. But I'm pretty sure they're the only bank that does this. For other banks like TD you benefit from having multiple credit lines to product switch in and out of.

The only other benefits might be the small worry of losing track of an account and someone making fraudulent charges on it and maybe also the small inconvenience of having to keep track of cards you don't use and having to maintain them by making a purchase every year. Both of which are pretty negligible hassles imo. I think I have close to 20 credit cards. I probably use about 6 of them regularly (Rogers WE, CTWE, PCWE, TDCBVI, Simplii, Amazon and whatever cards I'm churning and using for BTs). The others are drawered and it's really not that difficult to maintain them. Once a year I go to Dollarama and buy a few items on each card or more recently go to Walmart and use the self checkout to process one payment on each card. Scan item, tap card, print receipt. Rinse and repeat.

Unused cards are not hard to maintain and you keep your utilization low by having the extra credit. If the bank for your drawered card ever offers a new credit card product that's competitive you can product switch easily into the new card or even open the new card and then transfer the drawered cards CL into it thereby having a larger credit limit much faster. Maybe down the road you get a ULOC with the FI and then can transfer your drawered cards CL into that account. Maybe the FI starts offering BTs at great rates so you can use the drawered card for that later. Maybe you want to get a mortgage and the FI with the drawered card is offering a great mortgage rate so having a card open with them would make it easier to get this mortgage because you already have a relationship with the bank.

I just see so many benefits to just maintaining all cards and so few to closing that it surprises me to see so many people asking about closing cards?!! What hidden benefit am I missing here? lol I just don't get it.
For me, I cancel high limit lines I don’t intend to use anymore, to make room for potential additional future credit.
Some lenders will decline your application if they feel you have sufficient credit for your declared income.
And we also don’t see a point keeping it forever if it will never be used in the foreseeable future, for the sake of not losing a few credit score points.
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Mar 19, 2018
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coolintheshade wrote: For me, I cancel high limit lines I don’t intend to use anymore, to make room for potential additional future credit.
Some lenders will decline your application if they feel you have sufficient credit for your declared income.
And we also don’t see a point keeping it forever if it will never be used in the foreseeable future, for the sake of not losing a few credit score points.
That's interesting about some lenders declining applications if they deem you to have too much credit. I haven't had that happen to me yet and have a fair amount of credit across all cards and LOCs. I wonder what ratio of total CL to income these lenders consider to be high enough to decline applications? Has that been something that's happened to you often? Which financial institutions specifically if you don't mind me asking? Thanks
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gymchamp wrote: That's interesting about some lenders declining applications if they deem you to have too much credit. I haven't had that happen to me yet and have a fair amount of credit across all cards and LOCs. I wonder what ratio of total CL to income these lenders consider to be high enough to decline applications? Has that been something that's happened to you often? Which financial institutions specifically if you don't mind me asking? Thanks
I literally just went through this with TD as I was looking to consolidate some other banking products under one financial institution. I have a bunch of cards (AMEX Cobalt, CIBC Aventura VIP, Triangle WE, CapOne Costco) and never carry balances, but TD insisted that if I wanted to get their Aeroplan VI card I had to close off other cards as, in their words, I had "too much available credit".

I mean I sort of get it, but I then went to BMO and they said no problem, and you don't have to cancel off any other cards - so YMMV I suppose
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gymchamp wrote: That's interesting about some lenders declining applications if they deem you to have too much credit. I haven't had that happen to me yet and have a fair amount of credit across all cards and LOCs. I wonder what ratio of total CL to income these lenders consider to be high enough to decline applications? Has that been something that's happened to you often? Which financial institutions specifically if you don't mind me asking? Thanks
Has not happened to me personally, but I have heard more than once on this forum.
I have roughly 4x my personal income in unsecured available credit across all cards and LOC.
I haven’t experienced denial due to open credit, but if I did, I would understand the decision.
To avoid even experiencing it, I believe in closing lines that I don’t see myself using in the foreseeable future, including a CIBC credit card with a 21.5k limit, opened in 2007, that I closed just last month.
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BCisBeautiful wrote: Are you sure? It will drop average age from almost 7 years to around 4.5 years. Wouldn't be a huge impact, but maybe something like 5 points?
Depends on what you consider significant. I did something similar and had a drop of about 20 points but bounced back within a couple of months.
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Chrispy wrote: I literally just went through this with TD as I was looking to consolidate some other banking products under one financial institution. I have a bunch of cards (AMEX Cobalt, CIBC Aventura VIP, Triangle WE, CapOne Costco) and never carry balances, but TD insisted that if I wanted to get their Aeroplan VI card I had to close off other cards as, in their words, I had "too much available credit".

I mean I sort of get it, but I then went to BMO and they said no problem, and you don't have to cancel off any other cards - so YMMV I suppose
TD is like this... no one else is quite as anal as them.

I remember a few years back I applied for a ULOC with them to use as a Chequing... they granted me a piddly 10K limit at a ridiculously high rate of Prime plus 9% or something, and they wanted me to close off a few credit cards on top too.

I went to CIBC and they approved me for 55K at Prime plus 1% because of my professional category.

When I was recently hunting for a mortgage, again TD wanted me to lower my available credit and close off some of my unsecured LOCs. No other bank requested that from me.
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ozzie16 wrote: TD is like this... no one else is quite as anal as them.

I remember a few years back I applied for a ULOC with them to use as a Chequing... they granted me a piddly 10K limit at a ridiculously high rate of Prime plus 9% or something, and they wanted me to close off a few credit cards on top too.

I went to CIBC and they approved me for 55K at Prime plus 1% because of my professional category.

When I was recently hunting for a mortgage, again TD wanted me to lower my available credit and close off some of my unsecured LOCs. No other bank requested that from me.
Wondering whether closing competitors products is part of annual goal
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People worry way too much about this. Best RFD post ever about the matter:
dutchca wrote: I swear credit score is rfds internet dick measuring gauge.

In the grand scheme of things credit score means very little. 30 points is like 3mm so relax.

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