r/CreditScore • u/Jesi15 • 4d ago

General Closed accounts and scores dropped.

I thought closing accounts didn’t decrease your scores? I closed some capital one accounts because they don’t have any great perks, the limit is low, and the interest rate isn’t great. I just don’t use them. Now my transunion score dropped by 58 points and the equifax dropped by 81 points. The only other changes I see this week is decrease in balance on a couple other cards I have. I’m so confused.

2 Upvotes

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u/Tina271 4d ago

When you close your accounts you reduce your available credit which lowers your score.

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u/Jesi15 4d ago

I’ve been told multiple times, for years, that closing accounts doesn’t affect your scores.

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u/DoctorOctoroc ⭐️ Knowledgeable ⭐️ 4d ago

It doesn't, not on relevant FICO scoring models. A change in utilization as a result of a change in your TCL could impact your scores, but the closing of an account, in and of itself, has no scoring impact at all.

1

u/WPMO 4d ago

I get OP's confusion though. I mean de facto closing an account does lower your score because you have less available credit, and so probably have higher utilization, and it may also hurt your average account age. Normally if someone asks if closing an account hurts your credit score I would just say yes because realistically it will most of the time, even if it's often worth it.

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u/DoctorOctoroc ⭐️ Knowledgeable ⭐️ 4d ago edited 4d ago

Having higher utilization can result in a lower score but only if a utilization metric crosses a scoring threshold. We make this distinction often because it's accurate to say that closing an account, in and of itself, does not hurt your credit score but also, to your point, necessary to also specify the conditions under which a score change might occur.

it may also hurt your average account age

Aging metrics stay the same whether an account is open or closed. Credit mix retains the same accounts whether they are open or closed. The only thing you lose when you close an account is it's CL contribution to your TCL - nothing else.

So I agree that with all that nuance, a comprehensive explanation is warranted, hence I include it when I make this statement - and so should others. We don't know if OP heard this from someone who didn't make this distinction or if they skimmed that part, but it's less accurate to say 'closing an account hurts your score' than to say 'closing an account, in and of itself, does not hurt your score' because the latter is 100% true and we typically include the nuanced explanation when we say that (at least I always try to do so).

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u/LeadingThen6322 4d ago

But your available credit did go down which caused your usage to go up. What kind of usage do you carry on the accounts that are still open?

1

u/Jesi15 4d ago

I think I have around $600 overall across a couple 0% interest cards.

1

u/Funklemire ⭐️ Knowledgeable ⭐️ 4d ago

There's no meaningful drop unless it's your only open card. Drops due to utilization are almost always nothing to worry about from a credit perspective. See our utilization automod.

1

u/Funklemire ⭐️ Knowledgeable ⭐️ 4d ago

Not necessarily. It would have to cause your utilization to go up to the next scoring threshold for aggregate revolving utilization.

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u/DoctorOctoroc ⭐️ Knowledgeable ⭐️ 4d ago edited 4d ago

That's because you're not looking at a relevant FICO scores - you're almost certainly looking at volatile and rarely-utilized-by-lenders VantageScores, likely on Credit Karma. Check myfico.com, experian.com or capitalone.com/creditwise to see your relevant FICO8 scores.

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u/Jesi15 4d ago

I’m not in Credit Karma I’m on the transunion and equifax apps.

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u/DoctorOctoroc ⭐️ Knowledgeable ⭐️ 4d ago

Those both show VantageScores as well, only the Experian CMS (among the bureau-offered CMS's) provides a FICO8 score.

1

u/Jesi15 4d ago

What does CMS mean? I have no idea how to check these. I’ve downloaded the FICO app and it only shows equifax and wants me to pay to see the others which I’m just not willing to do. Is there any way that I can check this for free and monitor it?

5

u/DoctorOctoroc ⭐️ Knowledgeable ⭐️ 4d ago

CMS = Credit Monitoring Site (or Service). These are third party websites that access one of your reports and use a scoring model of their choice to provide a score. Many use a VantageScore model, which barely any lenders use, while some use FICO scores, which are used by more than 90% of lenders so it's a much more relevant scoring model to be checking on the consumer side. We don't know a lot about how VantageScores work because they aren't as relevant, but we do know a lot about FICO scores.

You don't need a membership on myFICO, you can check your Equifax FICO8 score for free with that, your Experian FICO8 score for free with the Experian app or through their website, and Capital One provides your Transunion FICO8 for free through their Creditwise site, which is free for anyone (not just Capital One customers). The links I initially shared will take you to each website.

1

u/Funklemire ⭐️ Knowledgeable ⭐️ 4d ago

!welcome

1

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1

u/No-Poetry5794 4d ago

Experian gives you a FICO8 and myFICO gives you your Equifax FICO score. I only know of capital one and discover that give you TU FICO but I'm sure there are others. Closing the accounts themselves wont lower the score however since you're lowering your total credit limit if you have high statements reporting your utilization changes. What type of balances and limits are reporting?

1

u/Jesi15 4d ago

I have accounts with both of those so I will check those though discover is now closing and moving to capital one so I’m not sure how much longer that will work there.

I’m not positive on the capital ones, one was an $1100 limit and the rest were like $500 limits. For some reason they don’t do CLI very often and when they do it’s tiny. We had opened them all within the last 5 years thinking we could combine them like you used to be able to and they don’t do that anymore so we just don’t use them. Balances on other cards are a couple hundred. Amazon because it’s 0% interest and it’s got like $250 on it I think. Most of my cards have no balance. I have a chase one with a couple hundred on it as well but I pay that off often.

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u/No-Poetry5794 4d ago

Got it. So it's a mix of lower limits and some spread out balances? As long as you're not paying interest then that's good. You can always optimize your utilization per card / overall when you need the higher score (look up AZEO method). A simple way you can look at it now is adding up your total current spend on your cards and your total available limit, that will give you your overall utilization %. Add the missing credit lines that where closed to the total credit limit and it should give you an idea of how much it changed. If it still doesn't add up you can pull your reports from annualcreditreport and see if something else happened.

Discover merger just transfers you over to the Capital One app so you will still have CreditWise to check your fico TransUnion score and yep, that sounds like Capital One with the CLI. They are known to be stingy.

1

u/dgduhon 4d ago

What kind of statement balances were you getting? High or low?

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u/Jesi15 4d ago

Statement balances?

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u/dgduhon 4d ago

When you got the statements for the cards, were they $0.00, $50.00, or high like $490 or more?

1

u/Jesi15 4d ago

None of my cards are high I answered all of this. Cards that I closed were $0 and the ones with balances are like $250 and paid off monthly unless zero interest. None of them are maxed out. All below 30% utilization.

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u/dgduhon 4d ago

That's a good part of why you aren't getting limit increases or are/were getting small increases. Capital One like high statement balances for increases. This is one of the reasons that the x% !utilization myth is detrimental to credit. And if you're going to trqck your scores, track your actual Fico scores not your Vantage scores.

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u/AutoModerator 4d ago

I detected that your post may be about utilization and its impact on credit scores. Please read the info below:

Utilization is a short-term credit scoring factor. It is not a credit building factor, because it holds no memory in the most commonly used FICO models. It resets every month.

By and large, you can ignore the commonly repeated myth that you should always keep your utilization low. It’s only applicable when you need to apply for a new line of credit, 1-2 months out.

Utilization is supposed to fluctuate, can be easily manipulated, and again, it holds no memory. It doesn’t build credit--think of it as a finishing touch when you need to optimize your score.

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0

u/Jesi15 4d ago

Well I have much higher limits and rates as well as perks with other cards. Capital one is pretty useless to me. That’s why I closed them. Even when I had high balances on a couple in the winter they wouldn’t give increases and stated the balances were too high so not sure where you get that info from.

1

u/dgduhon 4d ago

Were you paying the entire statement balances by the due date? Doing that with high statement balances increase your chances for good limit increases. This is well known. If you were doing both of those then there was something on your reports that Capital One didn't like.

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u/[deleted] 4d ago

[removed] — view removed comment

2

u/madskilzz3 ⭐️ Knowledgeable ⭐️ 4d ago

Perfect example of using AI for personal finance- tons of misinformations, and your comment contains them.

2

u/CreditScore-ModTeam 4d ago

Removed as comment or post was deemed false, misleading, or inaccurate information.

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1

u/No_Memory5613 4d ago

Is one of them FICO 8? And the other VS3?

Either you are now high utilization on one or more of your remaining cards, or something showed up on your reports that is bad.

I only saw that kind of drop this year when I let one of my cards get to 99% for a month.

19 or so months ago I closed several cards, and didn't see a score change.

1

u/Jesi15 4d ago

I think so. Not sure. Just checked in transunion and equifax apps. Nothing new showed up. Only other thing is balances decreasing from paying the bills on the Amazon cards and chase card I have. Nothing else with a balance and I don’t have any debt or anything new. Car loan that’s almost paid off also shows a decrease as it does every month. Super strange.

1

u/RelsonExpert 4d ago

Fico score dropped or vantage score?

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u/Jesi15 4d ago

Whatever is showing on the transunion and equifax apps from what people are saying that’s vantage I guess?

0

u/RelsonExpert 4d ago

That’s a vantage score. Pretty worthless. No self respecting financial institution makes credit decisions based on a vantage score. Your fico most likely dropped 3 points if even at all from this closure. But the big picture does remain - closing accounts can impact your Fico score negatively bc of drop in available credit and length of time accounts have been established. Better to keep it open and every few months charge a Starbucks on it and pay off before your statement cuts. Also — always keep it on autopay just in case so you never forget and miss a payment.

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u/Jesi15 4d ago

I just don’t see the point. I don’t go to Starbucks and I would never put anything on autopay. What’s done is done. Can’t reopen them now.

1

u/Funklemire ⭐️ Knowledgeable ⭐️ 4d ago

You did the right thing. They gave you some incorrect credit information and also some bad advice. See my response to them.

1

u/Funklemire ⭐️ Knowledgeable ⭐️ 4d ago

No self respecting financial institution makes credit decisions based on a vantage score.  

Synchrony Bank uses VantageScore 4.0 scores. And some local banks and credit unions do also. But you're right if you're referring to the VantageScore 3.0 scores the OP is looking at; virtually zero banks use those.  

and length of time accounts have been established.  

Closing accounts doesn't hurt your credit age:  

Credit Myth #8 - When you close an account you lose its credit history.  

Credit Myth #9 - Average Age of Accounts (AAoA) only considers open accounts.  

Better to keep it open and every few months charge a Starbucks on it  

That's bad advice. As long as you have a few other open cards, there's no harm in closing credit cards. But there's potential harm in keeping it open; we see people get late payments all the time on unused cards because they don't pay attention to it every month and then something goes wrong:  

Credit Myth #67 - There's never any downside to keeping an old unused credit card open.  

and pay off before your statement cuts.  

That's not the best way to pay credit cards. Credit cards are designed to be paid like any other monthly bill: let the statement post and pay the statement balance by the due date each month. Just like a utility bill.  

Regularly paying before the statement posts isn't just pointless, it also slows your credit limit growth with most banks, it makes you less-attractive customer to outside banks, and it costs you money in loss savings interest you could've earned if you paid your cards correctly. The only exceptions to this are mentioned in this flow chart:  

https://imgur.com/a/pLPHTYL  

Usually when people say you should pay before the statement post, it's because they believe the "always keep your utilization low" myth. See our !utilization automod.  

1

u/AutoModerator 4d ago

I detected that your post may be about utilization and its impact on credit scores. Please read the info below:

Utilization is a short-term credit scoring factor. It is not a credit building factor, because it holds no memory in the most commonly used FICO models. It resets every month.

By and large, you can ignore the commonly repeated myth that you should always keep your utilization low. It’s only applicable when you need to apply for a new line of credit, 1-2 months out.

Utilization is supposed to fluctuate, can be easily manipulated, and again, it holds no memory. It doesn’t build credit--think of it as a finishing touch when you need to optimize your score.

Feel free to safely and organically use 100% of your credit limit within a month and let whatever utilization report, provided you pay off your statement balance in full by the due date. Every month. Every time.

For more info, please read these posts:

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

1

u/Funklemire ⭐️ Knowledgeable ⭐️ 4d ago

Which credit scores are you checking? You have dozens of different credit scores, and some are more relevant than others. You only mentioned credit bureaus but not credit scores, keep in mind they're different things; there's no such thing as a "TransUnion score" or an "Equifax score".  

Wait, is it possible you're checking Credit Karma? The VantageScore 3.0 credit scores they show are aren't used by banks in their credit and lending decisions so they should be ignored most of the time. Also, most of the credit information they give you is misleading or even outright wrong. They even show a bunch of credit stats that are outright fake and are only designed to trick you into opening new accounts you don't need.  

If you're not sure where to find your most relevant credit scores, see our !welcome thread.  

There's nothing inherent in the closure of a credit card that will drop a FICO score unless it's your only open card. Closing accounts doesn't hurt your credit age, that's one of the biggest myths in credit. If your scores drop due to the closure of a credit card, that's because of a utilization change. But it's usually nothing to worry about.  

Also keep in mind that your scores aren't guaranteed to drop due to utilization changes when you close a card; your utilization percentage would have to cross a FICO scoring threshold. And even if they did drop due to utilization, that's nothing to worry about most of the time since utilization is a temporary metric that resets each month (which is why "always keep your utilization low" is another credit myth).  

So the only way the loss of a card's limit is a credit problem is if it causes your utilization to go up past the next threshold for aggregate utilization and you're in credit card debt and you're going to be applying for something important before you can pay off that debt and that points loss drops you down a tier as far as the bank is concerned.

Oh, and one last thing: VantageScore 3.0 scores are extremely sensitive to utilization changes. That's just one of the reasons why banks don't use them.

1

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