They Shut Down My Oldest Credit Card! AGH
TL;DR: Current FICO models usually take your credit card account ages into account. Don’t let them get shut down.
Despite knowing about this effect, I (accidentally) let my oldest credit card account get shut down.
I had gotten my first credit card in 2014, and recently after 2 years of having no expenses on it, the bank decided to close it. I had heard this sometimes happens – banks will shut down your credit card after 1-5 years of not seeing any significant purchases made. They claimed they sent me notices warning about this, but they sent physical mail to an address I had prior to moving to where I am now (despite me diligently updating my address with them!). I tried to talk with them; I brought out the carrot, the stick, and every trick in my tool kit, but ultimately there was no way to get that credit card account back.
Ok – so my account got closed, why do I care? FICO scores. In general those numbers can feel like a magic 8 ball, but apparently the age of your accounts affects 15% of your FICO score. That will include the age of your oldest (most likely credit card) account, and the average age of all your accounts. So when your oldest credit card account gets shut down, this can hit your FICO score, which did happen to me. I lost a few points really rapidly. Fortunately for me I didn’t need to take out a mortgage or get a new credit card immediately, but this didn’t give a great feeling.
It’s easy to end up with no activity on a credit card for a while, especially if you’ve since applied to new ones with better perks. Maybe you’re like me and you also balance a whole portfolio of credit cards for maximal value. Just make sure you charge something to all your cards once in a while. This doesn’t have to be a burden – you could use those cards to pay for your phone bill, streaming services, autopay for Amazon gift cards or Uber Cash, etc… and have autopay activated on these credit cards. I have my next oldest credit card automatically buying $5 in Amazon gift cards every month now to avoid this disaster again.
Hope this helps you avoid this pitfall!
Happy Practicing Elderly (Credit Card Account) Care!
TheJKW