“Closing accounts can never help your credit score, and may hurt it.” I’ve written that sentence over and over in the decade I’ve been covering credit scoring, parroting what I was told by Fair Isaac, creators of the leading FICO credit scoring formula. Each time I’ve updated my book, “Your Credit Score,” I’ve consulted with the company to see if anything’s changed, including that mantra.
But it turns out “never” never actually meant “not ever.”
Fair Isaac, now also known as FICO, recently backed off on its absolute language at MyFico.com when describing the effects of account closures. Turns out that sometimes, “in exceedingly rare situations,” according to a FICO spokeswoman, closure CAN help a score.
But FICO, being FICO, won’t tell us when, how or why.
Here’s what the spokeswoman emailed me when I asked why FICO said closures could never help scores when, in fact, they could:
“In exceedingly rare situations, closing a credit account can cause a person’s score to increase slightly. But because that situation is rare, and because the impact to a person’s score is positive when that situation does occur, and because FICO cannot provide details about that rare exception without disclosing proprietary information, FICO generally tries to remove any ambiguity for the public by explaining that closing a credit card account will never help your score and could actually lower it.”
If you’ve got a copy of my book, please feel free to insert the word “almost” in front of “never.” In the next edition, I’ll do that myself.