MyCardBlog

These days I received a lot of emails regarding canceled credit cards. It’s a truth that credit card issuers are closing a lot of credit card accounts. I think this is a very common question. There are many reasons that your credit card will be closed. Or sometimes you want to close your credit card account. I will briefly discuss how your closed credit card accounts will affect your credit score.

Actually there are many reasons for a credit card company to close your credit cards. The NO. 1 reason is low activity associated with your credit card. Credit card companies are losing money to maintain a dormant accounts. Meanwhile, unused credit card accounts usually have higher risk in terms of identity theft. The other reason is the credit card companies determine that you are at the risk of credit default. Thus they want to close your credit card accounts. Note: credit card company will access to your credit report regularly (once per month). Of course, the reason why your credit card account is closed is never clearly stated in the letter mailed to you.

Whether your credit score will be affected or not by closing your credit card account depends on your credit history with this credit card and other cards. If the closed account is the oldest one in your credit report, unfortunately, you credit score will decrease for several points. The length of time your accounts have been open is the third most important factor in your FICO score. Plus, you should also remember that closing an account will also reduce the available credit (increase the ratio of the balance to credit) which could also lower your credit score.

However, if you have a lot of other credit cards on hand and are still active and you have a relatively high credit score (>720), the closure of a credit card account will not affect your credit score too much. If the closed credit card is not the one that has the longest history, then you have nothing to worry about. But if you have a slim credit history and very few credit cards, it may be wise to keep your credit card active. In case your credit card is closed, you can always call them up and request them to reopen the account.

Some readers might just want to open a new credit account for sign up bonus ($250 or $150 or $100 or even $50). Then you might want to close the credit card account after you receive the bonus. I will say it’s OK to do this. There is nothing to worry about as long as you have enough active credit cards accounts.