I keep seeing people close their oldest credit card after paying it off, and it's a huge mistake.

My friend in Phoenix paid off a card he'd had for 15 years and closed it last month. His score dropped 40 points because his average account age got cut in half. I've seen this happen with three different people now. They think a zero balance card is bad, but it's actually helping their history. The length of your credit history makes up 15% of your score. Has anyone found a good way to explain this to people without making them feel dumb?

2 comments

2 Comments

rivera.jake11d ago

Saw my cousin do this with her first card from college. Tanked her score right before she was trying to lease a car. Now I just tell people to cut up the card but keep the account open.

richardh4411d ago

Wait, she closed her first credit card? That's brutal. That account history is like the foundation of your score. Closing it can slash your average account age overnight. I've seen scores drop 40 points from that move alone. Makes getting any loan way harder right when you need it.