Credit cards, FICO, and average age

[da8s0859q]

Wanted to get the SDN financial crew's opinion on something.

I have less than six credit cards. Average age is about eight years, with my own oldest going back ~14 years; the oldest, a reporting AU account which back-dates to over a couple decades ago.

Across all three bureaus, my FICO-8 is >800.

Never late, no collections. I do not carry monthly balances on anything except my student loans. My credit utilization is < 10%.

I have one particular card which is about 11 years old from Chase. After lots of debating the "premium / elite cards" category, I recently opened a new account with Chase (the Sapphire Reserve -- my penchant for dining out and occasional travel should cover the annual fee and a bit more, plus the little perks to it). I did not convert because the sign-up bonus, which ordinarily I wouldn't care about, translates into ~$750 credit on travel and isn't available with a product conversion.

No other account of mine has an annual fee. I am not a "churner" and don't play points games. This new card is my highest limit.

I don't like having so many accounts. I would close a couple others if I didn't want to maintain the age.

Other than perhaps a small, presumably not very consequential ding to my FICO, does anyone have any good arguments against rolling over the credit from that one account I mentioned into my new one, and closing the old one so as to consolidate accounts?

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[NYCNative]

Average age of accounts is actually a very significant factor in your credit score, and you can diminish it very quickly through closing old accounts and opening new ones. You might be better off with a 2% cash back card with no annual fee, but it sounds like you've done the math on the Sapphire Reserve, and it makes sense for your situation. You will run into an issue if you ever find that this card not working for you (you don't want to pay the fee because something better comes along), and you decide to close it and start over again with yet another card (your options will be limited in terms of which cards you can downgrade your Sapphire Preferred).

There is a penalty to closing the account; and advantages to be had by maintaining it. At the very least, I would try to find out if this maneuver will bring your average age down to 6 years, at which point you would see a not-insignificant penalty in your credit score. As it is right now, you are one year shy of the 9+ years subset, which is the highest designation.

 

[da8s0859q]

To clarify, average age across Equifax accounts on the face of it is 8-9 years. I manually calculated the credit ages, including a couple accounts that date back to way back when and are since closed (long story) but still report -- little over 10 years. Including a couple accounts that report only to one or two of the three bureaus, it's higher than that (including that one authorized user account from way back).

If I were to consolidate and close the account in question, it would knock me down from 10-11 years to ~8.9 years or something like that by back-of-envelope math.

I'm not a big credit card guy and don't even like that I amassed a few in college and carried them forward. If the Reserve ends up not worth the fee, I'd probably consolidate it into an existing no-fee Chase account, close the newer one to keep the older age, and leave things be.

 

[NYCNative]

The thing is, the fewer accounts you have, the faster you reduce your average age of accounts as you add new ones. If this is the only thing you are going to do for 5-10 years, and you own your house and car, it makes no difference. But if you will ever need credit in the future, you could in theory find your credit harmed through further reducing the number of cards that you have. For example, if for some reason other credit card companies were to close your other accounts due to lack of use, you could find yourself with very few old accounts, and a disproportionate number of new accounts. Were I in your shoes, the only reason I would close any old account would be because I never was going to need credit again, or because it was truly affecting me emotionally.

 

[Plastikos]

Here is a pic with the relevant info. Fwiw, I dont think it matters at all. Close some, credit operates on thresholds and your going to be fine and above that no problem.

 

[dpmd]

I have never closed a credit card account. There are some that I just never used in so many years they sort of faded away, but other than that I don't see the downside to having those accounts just in case (I have dug an old card out the drawer because I lost the main one I use and wanted to make purchases while the other one was in the mail-all of mine have some sort of rewards on them so I never pay cash unless I have to).