What to do with unused credit?

Question

EXACTLY!!! The effect lessens with the MORE you have. If you close cards, the less you have in the future to nullify the closing effect. Thank you for pointing that out. So if the effect LESSENS with the MORE cards you have, then it makes sense to NOT CLOSE them.

Answer 1

johnnyconsumer wrote:
I have never really understood the "close it" mentality. When all these accounts that get closed fall off your credit report in 10 years, you will have a major dip in your average age of accounts. Sure it may not seem like a big deal now, but when your AAoA goes from say 10-20 years to say 5 years, you will probably kick yourself for closing "unneeded" accounts.You don't understand in part because a person's open and closed accounts would have also aged in that time.  It's a call that each needs to make and it is not a one-size-fits-all matter.  If you prefer to keep everything open then definitely do so but don't assume that it's the best approach for everyone.  AAoA isn't the only consideration anyway and it's generally 15%.  If one cannot or will not actively montior all accounts then fraud is a potential concern.  The number of accounts that one can manage will vary from person to person.  I have no problems managing my 13 card but there are certainly those that prefer only having a few accounts. I've never kept accounts open that are of no use to me and AAoA has never been an issue.  My FICO's tend to be right around 800.  I could possibly eke out more points with a higher AAoA but it's really not worth it to me as I'm already well above the 740-760 mark.  Each has to do what works for the individual. johnnyconsumer wrote:
EXACTLY!!! The effect lessens with the MORE you have. If you close cards, the less you have in the future to nullify the closing effect. Thank you for pointing that out. So if the effect LESSENS with the MORE cards you have, then it makes sense to NOT CLOSE them.
It's an average.  Both the number of accounts and the ages of the accounts matter.  A strong AAoA can be built with a few well aged accounts.   Again, don't assume that these are one-size-fits-all matters.  If X works for you, that's great.  The next may use a different approach. johnnyconsumer wrote:
If i had 3 30 year old cards and two new cards and decided to get rid of the old ones I dont use, then in 10 years from now I would go to a 10 year AAoA, instead of 28 year AAoA.We create all sorts of scenarios where AAoA is drastically impacted and where AAoA is minimally impacted -- and many points in between.  One should keep AAoA in mind but, again, it's just one factor among many and one needs to keep one's entire credit profile in mind.  Any set of decisions is a matter of making improvements in one area and compromising others.  Each needs to to decide where the individual is willing to make such changes.  One simply cannot assume that the proper course of action is to always maximize AAoA regardless of other considerations.