Hi Travel Junkies,

Today we are going to talk about credit, and more specifically about one of the most misunderstood aspects of your credit score.

To do that let’s take a look at a recent question I received from one of my readers.

Hi Bryce,

You talk a lot about how you close old credit cards that you no longer use. Doesn’t that reduce your average age of accounts and therefore damage your credit score?

Credit Karma seems to indicate that average age of accounts is an important part of my credit score.


Great question. Let’s talk about that, starting with a quick overview of how your average age of accounts (AAoA) effects your credit score.

Average Age of Accounts is one of the factors that contributes to your Length of Credit History, which accounts for 15% of your FICO credit score.

FICO Breakdown

This metric is calculated just as you would imagine. They add up the age of each of your credit accounts and divide by the total number of accounts. Simple.

However, Average Age of Accounts isn’t the only factor that goes in to the Length of Credit History metric.

The Length of Credit History metric factors, in order of importance:

  1. Age of Oldest Account
  2. Average Age of Accounts
  3. Age of your newest account

If you’re interested in learning more about those check out my Ultimate Guide to Understanding Your Credit.

But for today, I’m going to focus solely on Average Age of Accounts.

Let’s start by introducing a little secret about the FICO credit scoring model.

When you close a credit card it will stay on your credit report and continue to age for 10 years.

10 years! Meaning that you could open a credit card today, cancel it tomorrow, and 9 years from now it would still show up on your credit report and contribute to your credit history.

Flawed? Absolutely.

But that’s how the rules are written. So let’s take a quick look at how you can use this to your advantage.

Say you have 3 credit cards, each with the following ages:

Card 1:  4 Years Old

Card 2:  3 Years Old

Card 3:  2 Years Old

Meaning that your average age of accounts would be (4 + 3 + 2 = 9 ÷ 3 =) 3 years.

And let’s say that you decide to cancel Card 2. Maybe the rewards suck, or the annual fee was too high, or the card just didn’t look good in your wallet. Doesn’t matter.

Ten years later (assuming you didn’t open/close any other credit cards) your account ages would look like this:

Card 1:  14 Years Old

Card 2:  13 Years Old

Card 3:  12 Years Old

Making your average age of accounts 13 years, the exact same as if you didn’t cancel Card 2 ten years earlier.

But what happens one month later when Card 2 finally falls off your report? That will really hurt your AAoA right?

Let’s take a look.

Card 1:  14 Years Old

Card 2:  13 Years Old

Card 3:  12 Years Old

Your average age of accounts would be (12 + 14 = 26 ÷ 2 =) 13 years! Completely unchanged.

Meaning that closing card 2 did absolutely nothing to harm your AAoA. Zip. Zero.

And because Card 2 wasn’t your oldest credit card, it’s safe to say that closing it had almost zero effect whatsoever on your Length of Credit History. And therefore almost zero effect on your credit score.

The only potentially harmful effect would come from a reduction in your total available credit, which could cause your credit utilization to rise and negatively affect your score. (Also covered in my Ultimate Guide to Credit)

So, should you go out and close every credit card that you simply don’t want anymore?

Of course not.

Unless you have a reason to close a card (big annual fee, etc.) I wouldn’t recommend it. Keeping them helps to prop up your AAoA long term and boost your credit score.

But if you do decide to close a credit card the effect to your credit score should be minimal. Just make sure you don’t lose your points by doing so.

Let’s review:

  • Closing credit cards (that aren’t your oldest card) has very little, if any, effect on your credit score.
  • Keeping 2-3 cards long term will do wonders for boosting your AAoA, and therefore your credit score
  • The age of your oldest account is much more important than your AAoA. Never close that oldest card.

Happy Travels,



Image: MyFico.com

Disclosure: 10xTravel has partnered with CardRatings for our coverage of credit card products. 10xTravel and CardRatings may receive a commission from card issuers.

Opinions, reviews, analyses & recommendations are the author's alone, and have not been reviewed, endorsed or approved by any of these entities. You can read our advertiser disclosure here.

About the Author

Bryce Conway is the Founder of 10xTravel.com and Author of Takeoff: How to Travel the World for Next to Nothing and How to Fix Your Credit: Do it Once. Do it Right. Get on with Your Life. Bryce’s work has been featured in multiple national media outlets including Good Morning America, Money Magazine, and ABC Nightline News. Bryce created 10xTravel in 2014 and has been hanging out in the points and miles community since 2011....

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