Does closing a card always hurt your score?

phxphun · ‎08-21-2009

I have a very long perfect payment history with my Chase Mastercard... never even one single late payment. I just got a notice of Change in Terms telling me they are raising my interest rate from 13% to 20%. I want to reject the change, but of course this means the card will be closed. Will this negatively impact my credit scores?

Anonymous · ‎08-21-2009

You might enjoy reading this - it's posted under Helpful Threads at the top of this Forum. Hope it helps!

Closing Credit Cards - Fused

phxphun · ‎08-21-2009

Thanks beamMEup! That helped.

smallfry · ‎08-21-2009

Don't close an old account just pay in full and the APR is of no consequence. While closed accounts are supposed to remain on your reports for ten years after closure there is no guarantee of that at all. I have lost nearly ten accounts on my Equifax report that should have remained until 2012-2015. Careful.

phxphun · ‎08-21-2009

Thank you smallfry! I think I will take your advice.

Anonymous · ‎08-21-2009

@smallfry wrote:
Don't close an old account just pay in full and the APR is of no consequence. While closed accounts are supposed to remain on your reports for ten years after closure there is no guarantee of that at all. I have lost nearly ten accounts on my Equifax report that should have remained until 2012-2015. Careful.

+1

DH & I have both recently lost a few on both EQ & EXP, and to a lesser extent TU. In both cases, all were set to stay on til 2012.

But it always brings me back to wondering what is a good AAofA and what is a bad AAofA? We all know less than 1 doesn't count, 1 is not so good; and high achievers are between 6-12. But there's a lot of gray areas in there. In spite of my losses, my AAofA at 8 yrs. is ok. DH however took a beating and lost 2.5 years on his AAofA (on EX - his others are okay) bringing him down into the 3's - which I'm assuming is hurting him.

Good point, smallfry!

MarineVietVet · ‎08-21-2009

@smallfry wrote:
Don't close an old account just pay in full and the APR is of no consequence. While closed accounts are supposed to remain on your reports for ten years after closure there is no guarantee of that at all. I have lost nearly ten accounts on my Equifax report that should have remained until 2012-2015. Careful.

Yep what he said.

Anonymous · ‎08-21-2009

A very long pmt history suggests it may be one of your oldest accts. In that case I would lean towards siding with what the others have said. A potential downside is should Chase ever decide to close it due to not enough activity, a manual review by another creditor would then show closed by issuer and not you. If a newer acct with a lower CL, I'd say close it in a heartbeat. Too many ppl worry about every litle ebb and flow in their scores even if for instance not in the mkt for a mortgage anytime soon, I've closed a number of accts over the yrs with no ill effect. Keeping my oldest ones and highest CL's open and a low util though has helped. But actually I wouldn't mind if EQ or EX did delete some early. Would give my reports a slightly tidier look.

Anonymous · ‎08-21-2009

ExcellCR wrote:
Too many ppl worry about every litle ebb and flow in their scores

Probably a very good point, ExcellCR.

I'd also be interested to know if, during one of those rare manual reviews, anyone has been knocked-out when an account was closed by the grantor rather than by the consumer. Perhaps it's becoming less and less common as systems and technologies change; and as our accounts are being closed for a variety of reasons that are not associated with creditworthiness.

I have yet to run into it through apping for several cars and mortgages - through CU's and banks - maybe someone else could chime in here with their experiences?

Message Edited by beamMEup on 08-21-2009 03:33 PM

phxphun · ‎08-21-2009

Ok, now I'm not so sure if I should close it or leave it with a zero balance. Since a 'long history' is relative, here are the details;

The Chase card I want to stop using is the only card I really use. It was opened in Feb 2007. It has a $25k Limit. Typically I run the balance up to $3-$4k per month and pay it off before it comes due. (So you might ask, why do I care if they jack up the rate... occasionally I don't pay it off before it cycles. Plus, it just makes me mad).

I've had two other cards longer than the Chase;

One Visa I've had probably close to 10 years that I just started using again in the past few months with small balances (<400). $6k Limit.

Another Visa that I haven't used in years. Probably 6 years old. $4k Limit.

I've never been late on any of them. Any idea which way is best to go?