Closing Accounts - Impact on Credit Score

robsaw wrote: ↑ Will NOT have a significant impact given the number of cards/age and utilization.

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?

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.

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.

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.

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

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

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?

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

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.

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.