How important is the age of held accounts

theburningcat

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.

[Deleted User]

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

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.

[Deleted User]

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

So 15 years is "moderately long" and 2 years is worryingly short?

[Deleted User]

2 years is pretty short term.

YorkshireBoy

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

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

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.

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

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.