Close HSBC myself or let them?

[wasCB14]

How clear is the evidence that "closed by consumer" is actually any better? Has anyone actually had an underwriter mention it? Or is it just another instance of the "If I were a lender..." game?

Lenders and consumers close accounts for various reasons. And unless you're pushing for a very large credit limit or an unusual number of cards with a lender, you probably won't be talking to underwriters unless your profile is borderline in some way.

If an issuer closes a card for inactivity, that should be pretty clear from the report with a long stretch of $0 balances.

If an account has a history of high utilization and tiny payments, "closed by consumer" isn't going to remove that.

[K-in-Boston]

I've personally never heard of any data points of someone having an issue with the remark.  In my last post, I used the hypothetical of seeing a lot of them in a short stretch of time, perhaps signifying an issue that isn't otherwise reflected on a credit report and may cause an underwriter to question them.

Certainly, if I were underwriting a mortgage and see that someone just had 6 accounts closed by lender in March and April and the person is applying for mortgage today, it would cause me to raise my eyebrow and inquire further as to whether they were all closed due to non-payment or late payments that were not reflected as 30+ day lates.

But my reports are littered with closed by credit grantor, and it has never caused an issue or even been mentioned.  Cards get closed for non-use.  Many people have that department store card they got 20 years ago and forgot they even had until it gets closed. Cards also get discontinued or moved to lenders who report a new account, even if carrying the same opening date as the original account.  Lots of perfectly reasonable reasons that an account could be closed by credit grantor.

[ChazzieT]

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@PandaGirl77 wrote:

So I got this, I dont like this card. Does either one or the other look better for me to close it first or let them close it? Is it worth putting some charges on it to keep it in my profile? Does HSBC have anything good to offer going forward?

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Do they have another card you like? Maybe ask for a product change. Ask if they have any retention offers (0% APR, BT deals, etc) that might make the card more appealing to you.

Considering the economic uncertainty of the moment. I wouldn't close a card unless I had really good reason to. Slap a $10 charge on it and stick it in the sock drawer.

Since I got the AOD Visa, my Cap One Savor One gets just enough use to keep it active. I have few enough cards that watching for fraudulent activity is easy enough, so I don't mind keeping it open, just in case I ever need it.

[Anonymous]

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@wasCB14 wrote:

How clear is the evidence that "closed by consumer" is actually any better? Has anyone actually had an underwriter mention it? Or is it just another instance of the "If I were a lender..." game?

Lenders and consumers close accounts for various reasons. And unless you're pushing for a very large credit limit or an unusual number of cards with a lender, you probably won't be talking to underwriters unless your profile is borderline in some way.

If an issuer closes a card for inactivity, that should be pretty clear from the report with a long stretch of $0 balances.

If an account has a history of high utilization and tiny payments, "closed by consumer" isn't going to remove that.

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I am an underwriter and I mentioned this earlier in the thread. My recommendation is close your own accounts, don't let creditor do it.

[NoMoreE46]

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@Anonymous 

I am an underwriter and I mentioned this earlier in the thread. My recommendation is close your own accounts, don't let creditor do it.

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And here we have it folks.

[K-in-Boston]

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@Anonymous wrote:

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I am an underwriter and I mentioned this earlier in the thread. My recommendation is close your own accounts, don't let creditor do it.

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Quite curious as to "why?"  I mentioned some reasons why it might potentially raise eyebrows in my last post (i.e. a number of them grouped together may show a lot of missed payments that were never reported as 30+ lates), but other than those reasons I honestly can't see how this is possibly an issue. 

Is the person who opened a Best Buy card in 1995 and had their account "closed by credit grantor" when HSBC sold the accounts to CapOne in 2011 somehow a higher risk than someone who got their card in 2013 when CapOne sold the accounts to Citi since Citi just changed the name but kept reporting the same accounts?  Is a person a high risk because they got a Virgin America airline credit card and when Alaska acquired them, the accounts were not sold to Bank of America and changed to Alaska Airlines cards?  I have numerous "closed by credit grantor" remarks on my reports; they have never been mentioned.

[Anonymous]

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@K-in-Boston wrote:

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@Anonymous wrote:

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I am an underwriter and I mentioned this earlier in the thread. My recommendation is close your own accounts, don't let creditor do it.

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Quite curious as to "why?"  I mentioned some reasons why it might potentially raise eyebrows in my last post (i.e. a number of them grouped together may show a lot of missed payments that were never reported as 30+ lates), but other than those reasons I honestly can't see how this is possibly an issue. 

Is the person who opened a Best Buy card in 1995 and had their account "closed by credit grantor" when HSBC sold the accounts to CapOne in 2011 somehow a higher risk than someone who got their card in 2013 when CapOne sold the accounts to Citi since Citi just changed the name but kept reporting the same accounts?  Is a person a high risk because they got a Virgin America airline credit card and when Alaska acquired them, the accounts were not sold to Bank of America and changed to Alaska Airlines cards?  I have numerous "closed by credit grantor" remarks on my reports; they have never been mentioned

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I cannot speak for other UWs, but if I see several "closed by creditors" I will look at dates to determine if an event occured and if there are derogatory or collections associated. "Closed by creditor" *can* be a red flag. I work for a smaller bank and we do look at credit reports fairly carefully.  If at all possible, close credit lines yourself and avoid closer scrutiny of your credit report. Often it is beyond your control (as you have described with cards switching banks) in those cases don't worry about it.

[Remedios]

My experience is the opposite from what you described.

US Bank underwriter showed no interest in a few cards closed by lenders. Instead, he was focused on why I closed some of them, because he thought churning was involved. 

[wasCB14]

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@Anonymous wrote:

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@K-in-Boston wrote:

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@Anonymous wrote:

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I am an underwriter and I mentioned this earlier in the thread. My recommendation is close your own accounts, don't let creditor do it.

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Quite curious as to "why?"  I mentioned some reasons why it might potentially raise eyebrows in my last post (i.e. a number of them grouped together may show a lot of missed payments that were never reported as 30+ lates), but other than those reasons I honestly can't see how this is possibly an issue. 

Is the person who opened a Best Buy card in 1995 and had their account "closed by credit grantor" when HSBC sold the accounts to CapOne in 2011 somehow a higher risk than someone who got their card in 2013 when CapOne sold the accounts to Citi since Citi just changed the name but kept reporting the same accounts?  Is a person a high risk because they got a Virgin America airline credit card and when Alaska acquired them, the accounts were not sold to Bank of America and changed to Alaska Airlines cards?  I have numerous "closed by credit grantor" remarks on my reports; they have never been mentioned

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I cannot speak for other UWs, but if I see several "closed by creditors" I will look at dates to determine if an event occured and if there are derogatory or collections associated. "Closed by creditor" *can* be a red flag. I work for a smaller bank and we do look at credit reports fairly carefully.  If at all possible, close credit lines yourself and avoid closer scrutiny of your credit report. Often it is beyond your control (as you have described with cards switching banks) in those cases don't worry about it.

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What is the threshold that might actually hurt an application?

A few scattered "closed by creditors" and no further evidence of an event?

A few "closed by creditors" suspiciously within a period of a few weeks or months, but no further evidence of an event?

A cbc with unusually high utilization and low payments?

I would just think a closure for inactivity would be pretty obvious...$0 balances and $0 payments for 6, 12, or 24 months. What's there to be suspicious about? It's easy to distinguish from a card with frequently high balances and less than full payments where there might be concern about a PFD late.

And to be clear, I do believe in "active" closing...just more with a fraud prevention motive than a "favorable reporting" one.