How does card paid off 10 years ago help my score?

This post originally appeared May 4, 2017 on CreditCards.com as “‘Is credit card paid off 10 years ago lowering my score?”

By Barry Paperno

Dear Speaking of Credit,
How can I delete old credit card records that were paid off over 10 years ago? They are bogging down my credit score?! – Christal

Dear Christal,
You’re going to be glad you asked this question. As you surely know, we consumers cannot simply delete negative information – for example, late payments, collections or bankruptcies – from our credit reports. By the same token, we are also denied the option of having positive information, whether old or new, removed from our credit reports.

Nor can we add new credit information, unless it’s the rare occasion where we are able to choose a landlord or mobile phone company that reports to the credit bureaus. And considering the damage we could be inflicting to our credit scores by deleting information that has been reflecting positively, perhaps it’s a good thing we can’t.

Positive old history helps your score
Far from “bogging down” your credit score, those old credit cards with a positive history are undoubtedly helping your score. But first, how do I know the history on each of those cards has been so positive?

  • Most negative information is removed from your credit report after seven years. So, if those accounts are still on your credit report after 10 years, I have to figure their payment histories are showing consistent on-time payments.
  • My guess is also that those cards are likely to be open still, despite having been paid off more than a decade ago. I say this because closed cards with a positive history tend to be removed within 10 years after closing, while open cards in good standing can remain well beyond those 10 years and indefinitely into the future.

So, how exactly do old cards contribute positively to your credit score?

  • Those accounts you want to delete are probably open and in good standing, but what if others on your credit report show a history of late payments? In that case, their negative impact can be minimized somewhat by the presence of many more accounts with spotless histories. In other words, the higher your “good-to-bad” account ratio, the better for your score.
  • It’s very likely that all accounts on your credit report are good ones in the eyes of the scoring formula. If so, and for as long as they remain open, the credit limits on those old cards could be keeping your credit utilization (balances/credit limits ratio) in check by adding to the credit limits side of the equation. Naturally, the lower this ratio, the better.
  • Though not quite as influential as how timely you pay or how much you owe, having many years of credit experience can also be valuable for your score. Your credit longevity is measured by such factors as the average age of accounts and your oldest account – both of which may be benefitting from such long-standing credit histories.

Maximize positive impact on your score
Not only do you want to avoid having these accounts deleted from your credit report, you may also want to consider taking the proactive step of reactivating them to ensure they continue playing this positive scoring role well into the future. Otherwise, the card companies could eventually close and purge them from your credit bureau files simply due to their inactivity.

  • To activate old paid-off card accounts, simply contact the card companies to provide your updated address, employment and other information, and to request new cards for you and any authorized users. Then start using the cards regularly for small or large purchases, while paying them off in time to avoid interest.
  • An effective way to maximize your score is to pay for charges before they post to the next billing statement. This way, not only do you keep from paying interest, but the resulting $0 statement balances that are reported to the credit bureaus will minimize the “balances” side of the utilization equation and thus the utilization ratio.

Now, considering all of the good things those old cards are doing for your credit score, aren’t you glad you asked?

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