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  • FIRST POST
    • theburningcat
    • By theburningcat 14th Oct 16, 8:29 PM
    • 55Posts
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    theburningcat
    How important is the age of held accounts
    • #1
    • 14th Oct 16, 8:29 PM
    How important is the age of held accounts 14th Oct 16 at 8:29 PM
    It is often suggested that holding accounts for several years is a good thing when it comes to applying for a new product. In general terms, how important is it and what is considered a sufficiently good duration?

    In short, I want to close my oldest accounts and this would be the key reason to keep them open.
Page 1
    • zx81
    • By zx81 14th Oct 16, 8:34 PM
    • 9,313 Posts
    • 9,137 Thanks
    zx81
    • #2
    • 14th Oct 16, 8:34 PM
    • #2
    • 14th Oct 16, 8:34 PM
    What sort of accounts?
    Are they active?
    How old?
    How many other accounts?
    How old are they?
    What are the balance/limit ratios?
    How do the limits compare to your income?

    Too many factors to give a one size fit all answer.
    • theburningcat
    • By theburningcat 14th Oct 16, 9:05 PM
    • 55 Posts
    • 10 Thanks
    theburningcat
    • #3
    • 14th Oct 16, 9:05 PM
    • #3
    • 14th Oct 16, 9:05 PM
    I would like to close a credit card I've had to 2 years (£2400 limit) and a current account I've had for ~15 years (£1800 od limit). They were both active until about 1 month ago. I also have a charge card I've had for ~2 years (frequently put >£4k on it) and another current account I've had for ~6 months (£500 od limit).

    I don't carry any balances. My current accounts are both in credit, my credit card is at zero and my charge card is paid off in full every month.

    I am a business owner so my income is declared in my Self Assessment at the end of the tax year. My 15/16 tax year income was about £25k. My 16/17 tax year income will be about £50k.

    I know there are a lot of variables but I want to understand how important account age is generally, what a worryingly short period or sufficiently long period actually is etc. I will use that to shape what I keep, for how long and whether I make some token use of older accounts so there's some activity.
    • zx81
    • By zx81 14th Oct 16, 9:08 PM
    • 9,313 Posts
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    zx81
    • #4
    • 14th Oct 16, 9:08 PM
    • #4
    • 14th Oct 16, 9:08 PM
    I'd keep them and make sure they're used at least occasionally. The current account is the only moderately long term account you have.
    • theburningcat
    • By theburningcat 14th Oct 16, 9:13 PM
    • 55 Posts
    • 10 Thanks
    theburningcat
    • #5
    • 14th Oct 16, 9:13 PM
    • #5
    • 14th Oct 16, 9:13 PM
    So 15 years is "moderately long" and 2 years is worryingly short?
    • zx81
    • By zx81 14th Oct 16, 9:15 PM
    • 9,313 Posts
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    zx81
    • #6
    • 14th Oct 16, 9:15 PM
    • #6
    • 14th Oct 16, 9:15 PM
    2 years is pretty short term.
    • YorkshireBoy
    • By YorkshireBoy 14th Oct 16, 9:43 PM
    • 28,263 Posts
    • 16,093 Thanks
    YorkshireBoy
    • #7
    • 14th Oct 16, 9:43 PM
    • #7
    • 14th Oct 16, 9:43 PM
    No-one here will be able to say what is good and what is bad. All you'll get is opinion. Even two lenders could disagree, depending on how their credit scoring is set up.

    But age of account is only one 'stability' factor though. Others include time at address, on the ER, on the ER at all previous addresses, time with employer (although not in your case), how long you've been self-employed, etc.

    In your situation (from what little you've posted), I most definitely would not be terminating my relationship with the current account provider. I'd even keep the credit card ticking over too. Just out of interest, are charge cards reported on CRA reports?
    • theburningcat
    • By theburningcat 14th Oct 16, 10:20 PM
    • 55 Posts
    • 10 Thanks
    theburningcat
    • #8
    • 14th Oct 16, 10:20 PM
    • #8
    • 14th Oct 16, 10:20 PM
    Thanks! I've moved around a lot and don't have a long history with an employer or with my self employment. I guess it is a redeeming factor. Now to figure out what to do with those accounts
    • 20aday
    • By 20aday 15th Oct 16, 8:51 AM
    • 1,705 Posts
    • 689 Thanks
    20aday
    • #9
    • 15th Oct 16, 8:51 AM
    • #9
    • 15th Oct 16, 8:51 AM
    Lenders like stability.

    In my experience I've moved house this year (just under six months ago), been in my current job (also less than six months) and my longest account held is just over two and a half years now.

    It would've been six years but Virgin Media don't provide services where I've moved to and I've just left Vodafone just short of five years.

    So when it comes to lenders it might look a little worse for me as I've a shorter history than someone such as yourself.
    It's not your credit score that counts, it's your account conduct and credit history.
    • theburningcat
    • By theburningcat 16th Oct 16, 11:35 AM
    • 55 Posts
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    theburningcat
    What is the best way to show some activity on unused account purely for this sake? Can I just set up one or two small regular payments (e.g. £5/month for Spotify) from the current account and credit card, and fund them with a standing order from my main account?

    Is that sufficient or are banks/etc. clever enough to figure out that one or two token amounts is not real usage?
    • YorkshireBoy
    • By YorkshireBoy 16th Oct 16, 11:44 AM
    • 28,263 Posts
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    YorkshireBoy
    All you can do with the current account is to keep it in the black, as the only thing reported to the CRAs is any overdraft limit on the account and how much of it you've used in a particular month. You should be more worried about the bank closing the account through non-use. For that reason, a couple of through transfers should be enough every couple of months (in my experience anyway).

    The credit card is slightly different. Ideally this will need some activity, to show you're actually managing a credit facility...and also to prevent closure for non-use.
    • theburningcat
    • By theburningcat 16th Oct 16, 11:52 AM
    • 55 Posts
    • 10 Thanks
    theburningcat
    Thanks. For the current account (held for ~15 years), I'll pay in £60 and set up Spotify to leave that one, which will be that done for a year. Should I ask them to remove the £1800 overdraft or keep it?

    For the credit card (held for ~2 years), I'm still unsure what to do. The card costs £3/month (123 Credit Card) and I don't expect spending more than £500/month on average on card-purchasable things in the next few months. I prefer to use my Amex charge card for that stuff as I get cashback and the website/app/service are much better. Putting any sensible amounts on it would be a nuisance, plus there's the card fee. On the other hand, the Amex is a charge card so it's the only revolving credit line I have.

    Maybe it would be better to cancel the credit card..?
    • YorkshireBoy
    • By YorkshireBoy 16th Oct 16, 12:08 PM
    • 28,263 Posts
    • 16,093 Thanks
    YorkshireBoy
    You keep dropping in bits of additional info.

    If you can't cover the £3/mth fee (my fuel spend alone well covers this on my 123 card) then you're paying for something you don't really know whether is helping or not. Maybe with this additional info, close it?

    I'd leave the current account O/D facility in place...unless you've any additional info you'd like to throw in?

    You never answered my question on whether the charge card gets reported to the CRAs.
    • theburningcat
    • By theburningcat 16th Oct 16, 12:20 PM
    • 55 Posts
    • 10 Thanks
    theburningcat
    Sorry - I appreciate your help

    The OD is an interest and fee free postgraduate (i.e. student) overdraft. When I started my PhD, they changed my former current account to a 123 Postgrad account. I don't pay anything for it but it is supposedly subject to using the account as my main current account. I don't and haven't for a long time. It seems they haven't noticed but I guess they will at some point, or at least when my PhD finishes in ~2 years, and change it back to a regular account.

    I have checked my files with CallCredit and Experian. The Amex charge card is on both but, if I recall, one of them had it under a different section, for charge cards, and the other had it as a credit card with a £0 limit.

    I should add, I want to keep the Amex because I like their service, website and app, and I am sometimes able to put large/business purchases on it and earn a lot of cashback. However, the £140 annual fee is coming up soon, so if it's not doing my credit file any large favours then another possibility would be to close that and either keep the 123 CC (which earns me no cashback and costs me £3/month but held for 2 years) or get some other CC (obviously would not help the age of my accounts but would mean having a revolving credit line).
    Last edited by theburningcat; 16-10-2016 at 12:29 PM.
  • jamesd
    It's not just the accounts you're closing but the ones that will be oldest once they are gone that matters.

    If your alternative accounts are all for only a couple of years there would be quite a long time taken to recover the loss of the current account.

    While views differ and the UK is not exactly the same as the US, a couple of accounts of each type is likely to do best. Types include loans, revolving credit like credit cards, mortgage, current accounts with overdraft facility. A current account with no credit facility will show up (unless exempt due to its age) but won't be credit with no overdraft facility, so keep something.

    Maximum benefit under the US FICO system for account age is about 15% of the total score and the UK is likely to be similar. But those percentages aren't fixed and if you are left with only accounts with short lengths it could do more harm than that. There's a FICO score estimator that you might like to play with even though it's strictly not for the UK. Even the questions can be useful since they show what is considered to matter.

    It suggests that I'd have a FICO score in the 680-730 range if I was in the US, the fair to good range, which is about right for a stoozer with quite high credit utilisation levels. If I cut my credit utilisation from the 70-89% range to the 50-69% range the score estimate changes to 690-740. If instead I change time for first credit card from more than 20 years to 5-8 years it changes to 655-705, illustrating the age of account effect. Of course I won't cut utilisation since utilisation is how I make money from stoozing.

    Here's a possibly useful idea from FICO of how they score various things:
    Last edited by jamesd; 17-10-2016 at 9:39 AM.
    • theburningcat
    • By theburningcat 17th Oct 16, 9:03 AM
    • 55 Posts
    • 10 Thanks
    theburningcat
    I will keep the 15yo current account. That's easy because I can set some random subscription to come off it just to have "some" activity".

    I'm more concerned about the credit card. It's 2 years old but it's my only revolving credit line. I would struggle to use it much (>£100/month on most months) and any use would be at the expense of putting those through a better rewards scheme on my charge card (I have no idea what the charge card really looks like to a lender but it seems having a "real" credit card is important) and paying an "annoying" £3/month card fee.

    It seems like I should keep the 2yo 123 credit card and just try to put what I can on it. I guess even if it's £100/month in petrol or whatever, it's better than nothing.
  • jamesd
    Yes, even having the card and using it for a Pound beats not having it. Another one would probably also help even if that also gets only low usage. Under US scoring less than 10% of the credit limit as usage is what produces the highest scores so no need to worry about not using a card for a lot of spending.
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