Credit card company closing my acct- credit score? (pay, rent, rate) - Personal Finance -debt, loans, credit cards, banks, insurance... - City-Data Forum

froggin4colorado · 07-31-2009, 12:15 PM

I just recieved notice from one of my credit card companies that they are closing my account. I have only had this card for maybe a year or so and have never been late on the account. It has been used/maxed twice and paid off twice. Right now, it is close to being maxed and was just about to pay it off again (next week). However, they are cancelling it all together. Doesn't this ding my credit? It has a 2,500 limit.
Thanks.

FBone · 08-01-2009, 09:57 AM

Not directly. "Closed at creditor's request" does not affect your score. However, since it raises your debt ratio and reduces open credit accounts these factors are considered when calculating FICO scores.
You can open another credit card (one that has generous reward program if you pay it off each month) to replace the closed account.

janetvj · 08-01-2009, 10:22 AM

I just had the same thing happen. It was my oldest credit card, and had the highest limit. Although I used the card often years ago, I had not used it at all for the last few years as the interest rate on it was really high. I would just pay the annual fee each year and that was it.

The reason they gave is too many open accounts (and that is true), and cards with high balances in relation to the credit limit. Actually, I only have 2 cards with balances over 30% of the limit, and I have only used one of those cards recently. The balance on the other card has been steadily declining. I have one other card with a balance of about 20% of the limit, and that balance has also been steadily declining. All the rest of my cards are at zero balances or are used and paid off each month. I ALWAYS pay more than the limit on all of the cards and ALWAYS pay on time.

I don't really care that they closed the account other than the negative effect on my FICO. I know they use the time you've had credit in their calculation. Will the fact that this is my oldest credit card impact that?

Also, I had just paid the annual fee on it. I called and they assured me they would reverse the charge and refund my payment. I will definitely be following up on that.

froggin4colorado · 08-01-2009, 01:08 PM

It frustrates me because we are selling our house in CO and moving to VA, renting in VA. We have never rented a home before (or apt) and worry that this ding on our credit will hurt us while we try and rent a home. We have never been late on our mortgage, credit cards, truck, and camper. However, with the recent events with these credit cards, it has lowered our FICO score below 600!! It was around 640 and we were just getting ready to pay off more stuff hopefully to bring it up above 700 and wonder what in the world is going on?! How in the world would it drop off that much? Yes, I have pulled my credit report and looked and its what it should be. Do you think my student loans that are in their grace period are hurting us??

texdav · 08-01-2009, 01:39 PM

More credit card companies are also looking more at debt to income ratio now on accounts they have.Bascailly just making adjustment for teh new rules to come and balancing risk to those.

Bideshi · 08-01-2009, 01:41 PM

If I owe nothing anywhere and they close my credit card account (there have been two in recent months; one card I had since '81, another since '86) does that hurt my credit?

Gandalara · 08-01-2009, 02:32 PM

I got a letter from Chase 2 days ago. It sat in my counter until this morning, I didn't want to see that they were going to lower my limit.

Finally opened it this morning.

They are
"making changes to your payment due date to give you more time to pay. (What's up with that? I pay in full and on time.) Beginning with your August statement, you will have an additional 5 days to submit your payment."

This is just plain weird. And I don't like being on their radar.

froggin4colorado · 08-01-2009, 03:18 PM

I visited with someone else yesterday who in the past month has had one credit card with a high limit (20K) had it reduced to $100.00. He is an investor and will use it and then pay it off. So it is maxed for a month then pays it off and then does it again. What's the point of having a credit card with a hundred dollar limit? He had another card with a 500.00 limit closed by a credit company. And his Chase card was also cancelled by the company.
I am finding a lot of people who are experiencing the same thing as I- accounts being closed for wierd reasons. What's up Chase?

janetvj · 08-01-2009, 03:35 PM

My account that was just closed was also Chase. It was originally Providian, then was sold to WaMU, and then to Chase.

I have another account with Chase with a much lower interest rate (even though it was recently increased, it's still lower than some of my other accounts) and I'd really like to keep that account. This one was always a Chase account. So far, they've only closed the one.

I understand that the credit card companies are trying to minimize loss, but I don't understand how they are determining whether someone is a good risk or not. For those of us who always pay on time, and always pay more (and often significantly more) than the minimum, it seems punitive.

I am striving for the day when all of my accounts are paid off completely. But that takes time, and meanwhile I hate to see my credit score suffer. I've worked very hard to bring my score up, and I know there are a lot of others in the same boat. I just worry about having to buy a car (mine is 10 years old), or even qualifying for a new mortgage somewhere down the road.

berdee · 08-01-2009, 05:12 PM

Quote:

Originally Posted by froggin4colorado

It frustrates me because we are selling our house in CO and moving to VA, renting in VA. We have never rented a home before (or apt) and worry that this ding on our credit will hurt us while we try and rent a home. We have never been late on our mortgage, credit cards, truck, and camper.

Reporting as being closed by credit granter won't hurt your credit score.

A few years ago the number of people with that notation on their reports were far fewer. Because of recent events the majority of people will probably now have at least one account reporting with that notation.
Generally the only ones who basically note that comment are mortgage underwriters. At most a mortgage underwriter may ask why it was closed by them and not by you, it's also possible that a rental agency may also ask that question. Since you had kept the account in good standing then whoever asks you about it will probably be satisfied with the "credit crunch, it wasn't me it was them" answer.

Quote:

However, with the recent events with these credit cards, it has lowered our FICO score below 600!! It was around 640 and we were just getting ready to pay off more stuff hopefully to bring it up above 700 and wonder what in the world is going on?! How in the world would it drop off that much? Yes, I have pulled my credit report and looked and its what it should be.

Is it already being reported as closed?
If not then there is something else driving your scores down.
If it is being reported as closed then the balance you have reporting on that closed account is hurting you. Also your overall utilization is no longer being helped by the credit limit on that closed account.
If it isn't being reported as closed yet then try to pay it off ASAP.

The history of that account will continue to report for the next ten years, more or less, which will help with your average age of accounts. The credit limit will no longer help your utilization.

Quote:

Do you think my student loans that are in their grace period are hurting us??

The utilization factor on the loans may be hurting you.