Macy's closed account for more than 30-month inactivity with no prior warning...do all CC's do this?

[foggyjack]

trumpet-205,

Thanks for your response!  I am an over worrier and can easily stress over senseless things...ha! :-)  Once I calmed down and really thought about it, I realized I was overreating and was mostly po'ed that Macy's closed my account without warning just because I hadn't used it.  After going through the mortgage process several times, I know DTI and payment history are most important, however, I've never had a credit card closed by credit grantor, so wasn't sure if it would be a big deal or not.  Thanks so much for all your good information and helping educate me! :-)

[SunriseEarth]

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@trumpet-205 wrote:

You are over-reacting on this. Closing card because lack of use is nothing new. It does NOT hurt you because,

* Closed card stays on your report for 10 years.

* Credit analyst doesn't care whether it was closed by you or the creditor.

* Only two things they care about are the current balance and payment history.

* Credit score is only a tiny part of your creditworthiness. A score of 832 vs 834 ain't going to hurt you at all. Stop being obsessive about it.

---

+1.   Some prefer the look of "closed by consumer," but it makes no difference in FICO scoring.    If you hadn't used the CC for 2 1/2 years, it doesn't really seem like you'll miss it much.  

[foggyjack]

SunriseEarth,

Thanks for your response!  I agree!  Had Macy's contacted me prior I'd have been able to close the account by consumer or use the card to be able to keep the $3k additional credit.  Thanks again! :-)

[keithB]

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@foggyjack wrote:

Hello,

I have monthly score watch with My Fico/Equifax & just received an email stating there was a credit change on my account. After logging in, I was shocked to see my Macy's account with a $3,000 limit was closed by creditor.  My 'My Fico' credit scores are 837, 832 & 820 (I just bought a My Fico 3-merge credit score/report this past week!)  I immediately called Macy's and the authorization department said it was closed due to inactivity in 30 + months!  What?!?!  How about a warning at least??  I asked her if I had charged even $5, would it have been closed and she said no!  I asked her why I hadn't been told this would happen to give me a chance to use the card and she said she thought they send out letters...nope...never received a letter!  Bottom line, the 2 Macy's representatives were no help at all, even giving conflicting information.  Hence, I thought I'd come to the CC forum and ask some questions.

Some background for my questions/concerns....my husband and & were transferred from West Coast to East Coast less than 2-years ago.  We only closed on our present home in March 2013.  Well, we're not getting transferred back to California!  The company will again put us up in corporate housing until our current home sells and we purchase in California...my husband actually flies out on Tuesday (car already shipped) and I will stay on here to get house listed, etc.  Obvioiusly, I will have to go through the mortgage process again very soon!  So, my questions have to do with this sort of incident because I know I will be going through the 'oh so fun' mortgage process again very soon.

I have lots of open credit card accounts that I don't use, ranging from store accounts to Visa/Mastercard accounts.  I really only use my American Express, Discover, 2 Chase Visas and, sometimes, my Bloomingdales, Saks, and Neiman Marcus store cards.  Except for my American Expresss, I almost always pay all my credit cards in full before the closing dates.  Every once in awhile, I may have a balance of $20-$100 on one of the other cards because a charge may have been pending and the CC won't let me pay the pending amount. 

We've known for a few months now that we would be moving, so I've been extremely cautious NOT to use any credit card accounts because I recently found out if I do use a dormant card, I immediately get a Score Watch alert!  One such situation recently occurred and it actually dropped my Credit Score.  Here's what happened...I used my Restoration Hardware credit card, which I hadn't used in about a year...the order was less than $200...I received shipping notification 2-days after placing order and I immediately went to my RH online account and paid the amount in full (and before closing date), hence I still had a $0 balance on closing.  Well within a couple of days of paying the RH bill, I received a Score Watch alert saying my Credit Score had dropped!  I immediately logged in and the reason for the score drop was because I had used a dormant account!  Granted, the score only dropped from 834 to 832, but the Restoration Hardware account never showed a balance! 

Obviously, I'm very confused on how all of this works.  I thought I could use any of my credit cards and as long as I paid them before the closing date, my credit score would not be affected?  How did Equifax even know I had used my credit with RH when I paid it 2 days later and before the account closed with a balance?  Do you guys know which credit card & store card companies close dormant accounts without notification?  I guess I could just call all of my credit card & store card companies and ask them?  Yikes!  I'm worried because I have over 15 credit/store accounts I haven't used in over a year.  I feel like this is a double edged sword because I know now if I even use a CC & pay before closing, the CRC's still know and, even charging very small amounts can trigger a decreased score.  

I'm hoping you guys have some valuable information and/or suggestions on how to navigate so many dormant accounts right before I will be going through the mortgage process again.  I definitely don't want another dormant account to close as the comment on the Macy's account was 'closed by grantor'...it said nothing about the fact that they only closed the account because I hadn't used it in so long! 

Thanks in advance for any and all information! :-) 

Foggyjack

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Foggy J,

If I can be so bold, the first thing I would do are go through your card (stores and prime) and consider putting a charge on them for the time being.  I know you have 15 cards and I'm in no way telling you to buy junk you have no need for but I think you need to put a little action on them before anymore are closed out on you.  If you can do this, you'll buy yourself time to close out the cards at your convenience, not the store's. Also, you should take into consideration the age of some of these cards you no longer use.  If they have been acquired after some of the cards you plan on keeping then no big deal.  But if they are some of your oldest cards, then closing them could affect your score down the road - but even if you close them, they will report for the next 10 years.

You are in a great position and I actually feel awkward trying to give advice to someone with as stellar as credit as what you and your husband have but I'll try my best.

It seems to be consensus here that to maximize FICO scores, what is needed is to have one card report a small balance (1-9%).  The rest of the cards should be paid off completely if possible.

But getting back to those store cards. After buying yourself some time to keep, or deciding which cards to cancel, I would suggest you take advantage of credit limits that can be increased via a "soft pull".  One of the best cards for this is American Express.  I imagine you have a very good limit and to take advantage of what American Express can offer can really help out people with credit maximization.  AMEX (American Express) can do this in two ways:

1) Generous credit line increases (CLIs) via soft pull on credit report

2) Back dating on new cards (may not really an option if you are doing the mortgage thing soon)

For example, let's say your AMEX credit limit is $15k, you can easily request a CLI of $9k to make a total CL of $24k on your card.  Over $25k, I'm told may require the submission of financial documents and honestly, I'm not sure whether or not a hard credit pull will be required - obviously not what you want to do if you know you will be looking for a new mortgage soon.

Again, a lot of my info here is a lot of "what ifs" because I do not know your complete situation.  You might already have a $50k limit on your AMEX as it stands for all I know.

But my best advice for you now is just put a little play on the dormant cards.  If you want to make up the utilization lossed by either the closing of the Macy card or wanting to close other dormant cards, plan ahead and get a CLI that will "wash" the loss of utilization - but make sure the CLI is a "soft pull" on the credit.  Haha, but utilization is only really important if you are carrying a balance and by your scores, it doesn't sound like you are carrying much!

But there is great advice here on this site. I agree the losing of this one account won't affect you much but obviously, you don't want your other cards to do the same. So, IMO, the quickest course of action is put some use on the cards you haven't used for awhile.  If you have some wiggle room on the AMEX card, request a CLI via soft pull (online request worked for me). But other than that, with a mortgage looming, avoid opening or closing new credit lines but I'm sure you already knew that 

Good luck!  There is much good info on this site and I don't have 1/10th of the knowledge of some of the people here. Hopefully I've been of some help and haven't just repeated what you already know.

[foggyjack]

keithB,

Wow, keithB!  Thanks again for ALL this information! :-)  I really appreciate the time everyone takes on the myFico forums to help people!  it's always my 'go to' place when I have any issues or questions...and for good reason...the might efforts taken by you and others are very humbling!

I love all your suggestions!  I never even thought of getting a CLI from one of my credit card companies that will do a soft pull to make up for the $3k available credit lost from Macy's!  Thankfully, that account had only been opened since 2008, so average age is short. 

I wasn't sure if a mortgage lender would look negatively on a recent closed account by grantor', even though it was closed for inactivity (that information is not on the report...of course!)  Luckily, we found out in April we'd be getting transferred in the fall, so I've been careful to only carry a balance on Amex & pay in full...plan on keeping it that way until we get through the next mortgage process.  Can't promise I'll do the same afterwards though...haha! :-) 

I'm going to call the credit card companies this week that I know I haven't used in over a year...just to find out when/if they plan on closing for inactivity...if so, I'll definitely charge a little something on them even if it dings my credit a couple of points.  Like one poster reminded me of in this thread, I won't get a lower mortgage rate with 800+ credit scores...the cutoff is 760.  After we close in CA, I'm definitely going to start doing as you and the others suggested to keep this from happening again.

Thanks again for all your great suggestions! :-)

[gh17]

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@foggyjack wrote:

Every once in awhile, I may have a balance of $20-$100 on one of the other cards because a charge may have been pending and the CC won't let me pay the pending amount. 

---

Unrelated to most of the post, but just so you know, if you pay directly through your bank online (usually through a bill pay tab or something), you can pay whatever amount you want whenever, regardless of whether there's a balance on your account.  I often overpay cards - this helps because, for example, I use my Citi almost every day for restaurant purchases, so it'd be hard to ever get a zero balance to report if I was waiting for pending purchases to clear (usually something new is clearing every day).  I often just push $50 even if the balance is only like $10, because I know it'll get up to $50 soon enough anyway.  Are you paying directly through the cards' websites?

[gh17]

To answer the rest of your post..

First off, anything over 800 is going to be treated the same in terms of mortgage rates.  In reality, everything over 750 or so is probably going to bet treated the same.  Once you're that high, trying to maximize your score is kind of worthless beyond making yourself feel good.  (That said, I enjoy trying to maximize my score and I'm in the high 700s, but I acknowledge that it doesn't really matter.)

Credit cards will frequently get closed if you don't use them.  To be really safe, best to use every card a few times a year, although it's unlikely that they'd close it before a year was up.  I think most will probably wait at least two years.  But they're entitled to close whenever they want.  It's best to only have cards that you know you can use on stuff you'd buy anyway at least once a year or so.  Having too many store cards can be difficult if you don't shop at each one at least one or two times a year (and if you're not shoppng at them frequently, you're probably not benefitting from their rewards).  You have a few options with regard to accounts you don't think you'll use very often-

1) Make small purchases on all of them once a year.  Pro is that this keeps them from being closed, con is that this requires you to spend money on stuff you probably wouldn't otherwise want, which is rarely a good idea.  Another thing to keep in mind is that your credit score may go down TEMPORARILY if you make charges on all these cards because a portion of your credit score is number of accounts reporting balances.  However, this is a "memoryless" part of your credit score - so if the following month, you're back to only one card reporting a balance, your credit score instantly goes back up to what it was before; it "forgets" that you had balances on a lot of cards the prior month.

2) Close the accounts you don't plan to use often.  Pro is that this makes your cards easier to manage and you won't get "closed by grantor" listed on your credit reports.  Con is that in 10 years, these accounts will fall off your report, which could hurt your average age of account. In the short to medium term, this doesn't matter at all - there's no effect on the average age of accounts for 10 years.  It's hard to think 10 years in the future, but potentially there could be an effect then, especially if the accounts you're closing are your oldest.  It's unlikely that this would have a huge effect, but it's something to keep in mind.  Another effect closing accounts has is on utilization.  Utilization is % of credit limits that you are using, so high credit limits can help you in this regard, and when accounts close, you'll eventually lose those limits which could increase your utilization.  Someone else will need to verify, but I believe this effect happens instantly (not after 10 years).  Keep in mind that if you already use less than 10% of your available credit, and if dropping these accounts' limits would still leave you at less than 10% of your available credit, then this is unlikely to have any effect, and if it did, it'd be pretty small.

3) Don't do anything and risk having the cards closed by the credit card companies.  This generally has the same cons as (2), but obviously only if the accounts actually get closed, which they won't necessarily - it's hard to know.  This could be better than (2) because the accounts are getting closed later (rather than sooner), so that "10 years after closing" point comes later, so you have more time before they drop off your report.  Or they may never get closed at all!  The only real benefit to (2) over (3) is that your cards will probably say "closed by consumer" (or I forget the actual terminology) instead of "closed by grantor."  Keep in mind that these two notes have NO difference on your credit score.  There is a SMALL chance, however, that someone looking at your account manually for slightly prefer if you'd closed it yourself rather than the grantor.  But this is really very unlikely, and at your high scores it would never make any difference in rates.  It's mostly just personal preference.

Hope that helps!  At the end of the day, know that none of these options will make a huge difference.

Another thing you mentioned is that your score changed a few points after you'd made a charge on a previously inactive account.  That seems weird to me, but admittedly the score change was small.  Have you verified that it was showing a zero balance?  Although most cards report the balance on your statement, some report at a certain time each month, for example, that may not line up exactly with your statement.  If this is the case, it will have an effect on your score, but only a temporary one with no lasting effects.  If it does say it had a zero balance on your credit report, that's weird, but it's definitely possible that there are intricacies with credit scores that we're all unaware of.  There is a lot of information on your credit report, like amount paid and high balance, that we usually don't think are used in credit scores, but it's possible that they are in certain situations.

[foggyjack]

gh17,

Yes...you are correct...I pay all credit card bills on the credit cards' websites...that's a great idea though to pay any pending charges through my bank's bill pay to zero out the card before closing!  Thank you so much, gh17, for your great suggestion!  I certainly appreciate it! :-)

[foggyjack]

gh17,

Oh my gosh...you contributors are awesome...thanks so much for all the great information, gh17!  I'm seriously overwhelmed at how much time you took to educate me! :-)  I've learned so much these last couple of days.  I'll definitely be referencing back to this thread after selling current home & purchasing in CA.  Thanks again and Happy Labor Day everyone! :-)

[Anonymous]

Macys acct holder since 04.....date of last activity 2005...i was told by macys they dont cancel dormant accounts.  I just had them send me a new card last week after 9 years of inactivitczy...not sure what happened but they arent supposed to cancel dormant cards unless u had any prior lates or deragatory stuff