X'ed by Discover

[GREENBACK]

I know this has been a recent topic of discussion but it hadn't affected me (far as I know). I rec'd a letter today from Discover that told me my account has been closed. I hardly ever used it so I'm sure that's why. I got that card almost 20 yrs. ago and never canceled it because of not wanting to hurt my credit score. I have a few other old cards that I don't use and I wonder if they're soon to follow.

[disneysteve]

Yes, it is very common today. CC companies are lowering card limits and closing inactive accounts to limit their risk. They don't want folks in trouble to suddenly run up a big bill and then default on the payments or file for bankruptcy.

[sweeps]

Citibank lowered my credit limit on a card that I hadn't used for a year -- from $9000 to $2000. I cancelled the card in protest. Steve's right -- the CC companies are pulling in the reins.

[GREENBACK]

Is it true that if you cancel the card yourself it affects your cedit report differently than if the company does it? I'm thinking of canceling a few of them if it's a more favorable result for me to do it myself.

[disneysteve]

Originally Posted by GREENBACK

Is it true that if you cancel the card yourself it affects your cedit report differently than if the company does it? I'm thinking of canceling a few of them if it's a more favorable result for me to do it myself.

That's a good question. I don't know if it matters. Either way, it will affect the average age of your credit. Either way, it will affect your utilization ratio. I guess it depends on if them closing it somehow shows up as a negative on your report.

[boosami]

Originally Posted by disneysteve

That's a good question. I don't know if it matters. Either way, it will affect the average age of your credit. Either way, it will affect your utilization ratio. I guess it depends on if them closing it somehow shows up as a negative on your report.

Doesn't matter if you close it or the creditor does. It can affect your average age, but will not immediately. If you close a 5 year old account, it still counts toward your average account age as 5 years. Eventually (after 7 or 10 years) the closed account will drop off your report, and will no longer be included in the average account age.

People often make the mistake of thinking that closed accounts immediately drop off when determining average age. In reality, it's the utilization ratio that has an immediate effect.

[GREENBACK]

Most of the cc's I have are old accounts. None are less than 10 yrs old. I have one as old as the 20 yr old account that was closed. I wonder if I have another that old will it matter that this one closed.

[wincrasher]

Why not charge alittle something and keep your accounts active?

Gas up the car, buy a book, buy groceries, whatever you regularly do anyways.

If you aren't gonna use your accounts then what is the point of having them?

[GREENBACK]

Originally Posted by wincrasher

Why not charge alittle something and keep your accounts active?

Gas up the car, buy a book, buy groceries, whatever you regularly do anyways.

If you aren't gonna use your accounts then what is the point of having them?

I don't need the old accounts(3). I would cancel them if it didn't affect my credit score much but am not sure what the effect would be. They don't cost anything so I keep them active. My old accounts are with Chase, BOA and CITI. I got them years ago playing the balance transfer game but I'm done with that.

[kork13]

Originally Posted by GREENBACK

I don't need the old accounts(3). I would cancel them if it didn't affect my credit score much but am not sure what the effect would be. They don't cost anything so I keep them active. My old accounts are with Chase, BOA and CITI. I got them years ago playing the balance transfer game but I'm done with that.

The other question is if you really need your credit score to be in tip-top shape anytime immediately (for these purposes, within 1-2 years)? I mean, unless you're buying a house, needing to get financing for a car, or get some other kind of loan, does a hit against your credit really matter for you? In most cases, a credit file will repair itself within 1-2 years from something as simple as closing a couple accounts (so long as you're otherwise good about your credit).

[GREENBACK]

Originally Posted by kork13

The other question is if you really need your credit score to be in tip-top shape anytime immediately (for these purposes, within 1-2 years)? I mean, unless you're buying a house, needing to get financing for a car, or get some other kind of loan, does a hit against your credit really matter for you? In most cases, a credit file will repair itself within 1-2 years from something as simple as closing a couple accounts (so long as you're otherwise good about your credit).

Right now I don't need a high score for any reason but I've learned over the years that $hit happens and why lower your score intentionally if you don't have to.

[kork13]

Originally Posted by GREENBACK

why lower your score intentionally if you don't have to.

especially with CC's, I give 3 reasons:
- Security... less chance that someone could run up stuff with a stolen account, which I wouldn't notice since I never use the account. It's one less account to keep track of.
- Mental well-being... the fewer people who have stuff hanging over my head, the better. Even if just an unused card, they still have all my personal information--this is the same reason I contact companies that send me junk mail (snail mail), to get off their mailing lists.
- I'm inherently optimistic, so I don't worry about the absolute worst-case scenario where I might potentially need a sudden availability of lots of credit in order to sustain myself. ...and that's not really a good backup plan anyway.

[GREENBACK]

Originally Posted by kork13

- I'm inherently optimistic, so I don't worry about the absolute worst-case scenario where I might potentially need a sudden availability of lots of credit in order to sustain myself. ...and that's not really a good backup plan anyway.

I'm optimistic too and plan for all kinds of worse case scenarios at the same time.

Credit may dig you a big hole in a worst case scenario but it could also be a lifeline if you get in really deep beyond your control. What's important is that you realize what you're doing and have a plan to get out of trouble.

I don't plan to use a card to bail me out of anything but if it becomes my last option I would like to have that option available to me.

I know other options are available but I want as many options as possible.

[simpleyme]

Originally Posted by kork13

- Mental well-being... the fewer people who have stuff hanging over my head, the better. Even if just an unused card, they still have all my personal information--this is the same reason I contact companies that send me junk mail (snail mail), to get off their mailing lists.
-.

I have found that once you give them your info they always have it and will not purge it

I cancelled my home depot card , when i rented a truck years later I did not need to give them a CC to secure the truck rental since I had a home depot card, What? no I don't I closed it!

they guy said yea but if something happens they will just reopen it

[Seeker]

Originally Posted by simpleyme

I have found that once you give them your info they always have it and will not purge it

I cancelled my home depot card , when i rented a truck years later I did not need to give them a CC to secure the truck rental since I had a home depot card, What? no I don't I closed it!

they guy said yea but if something happens they will just reopen it

True, but it really depends.

My Crocker National Bank card was closed, and they later merged with Wells Fargo. Wells Fargo did not get the info and I ended up separately applying for their card a long time ago.

I've not really closed many accounts... generally when getting a renewal, I many not call up and activate the new card. When I do that, every year I get the renewal . They don't always seem to take the hint.

But also I've had the above situation arise too. Once when replacing a necessary for work laptop through Dell, they told me that can put it on their CC for another discount. I told them that I don't have the card anymore, and they told me that it's in the system and I could use it free of any interest charges for 6 months. Of course, I took advantage of the add'l discount and paid it off entirely before the 6 months were up... so it gained me more than the rewards from Discover.

But yes, if a CC is renewed or available in the system (and the company has not gone out of business nor merged), then the account can be reused or re-opened. Even if you have closed the account by talking with them, it can be reopened under newer terms.