The latest buzz right now in the world of personal finance is that credit card companies are closing accounts — without notice. The way card agreements are written, this is perfectly legal. However, it can have negative consequences when it comes to your FICO score (even with the new scoring formula).
Preventing credit card closure
For the most part, credit card companies are closing accounts that have been inactive. So, if you’ve just been leaving the card open for the history it brings to your credit report, you could be in trouble. And a closure by the company weighs more heavily against you than when you ask to have the card closed. Here is what you can do to prevent credit card closure — and reduce the impact of closures on your score:
- Decide which inactive credit cards are the oldest.
- Make a purchase or two on them every month (pay off the balance) so that they aren’t closed.
- Consider closing, on your own, newer credit cards that you do not use.
Hopefully, you can heed the warning and work to keep some of your little used credit card accounts open. Excessive use of credit cards is never recommended, but you so need an open account or two in order to protect your credit score.
January 22, 2009 at 2:20 pm
[...] to use your credit regularly. To avoid having your credit card account closed (and lowering your available credit and messing up your credit used portion), use a credit card [...]
January 22, 2009 at 2:20 pm
[...] to use your credit regularly. To avoid having your credit card account closed (and lowering your available credit and messing up your credit used portion), use a credit card [...]
March 23, 2009 at 5:32 pm
[...] prefer those who carry a balance from month to month. (The recent trend by credit card companies, shutting down “inactive” accounts, is one manifestation of the companies’ hatred of responsible credit card use.) The New [...]