I am on a quest to pay off all of my credit cards. I called a couple of creditors to see if they would lower the interest rate on my cards, but they would not so I cancelled them. I am not in arrears or anything on the cards, but one of the reps for the credit card company told me that cancelling the card with a balance owed would negatively affect my credit score? Is there any truth to this?
In my experience, they won't allow you to cancel if you have a balance. However if you were successful in canceling and are still paying, they should still update when you make payments, but then it's not really canceled. Canceling cards can lower your score too because the CL is not factored in any more against your UTL.
But to answer your question, a negative balance on a closed account is not good, but just because it is negative, does not mean it was reported as charge off or late. The negative amount goes against your UTL I believe just as if it were open, BUT, the credit limit is no longer counted, so your UTL is higher.
If they stop reporting payments, you will have to get them update your CR to reflect paid $0 bal. This is important!!!
Never close until card is paid in full if you must close. I can't see how they would close it if you are still making payments.
** If you closed a card with a $0 bal, and it shows debt still. YES you need them to correct it, or dispute it as $0 bal.