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Need advice on closing credit card

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gingerflower
Valued Contributor

Need advice on closing credit card

I was just informed my Chevron credit card which had a line of credit of $10,000 was decreased to $1064.00 due to no activity use. I could not use the card because where I reside there is no chevron/texaco...I have had this account since 2008 i hate to close the account because it will ruin my score!! I was informed today that we have a Midas auto center and it accepts Chevron/Texaco card. Should i close the account? Pls help..Smiley Frustrated

Message 1 of 18
17 REPLIES 17
marty56
Super Contributor

Re: Need advice on closing credit card

Do not close the card.  It is helping your FICO score even if it has a $200 CL.  Try to use to once in awhile and they may increase your CL.  My oldest CC is a Chevron card from 1984.  It has a 2k limit and it my precious, my precious.

1/25/2021: FICO 850 EQ 848 TU 847 EX
Message 2 of 18
gingerflower
Valued Contributor

Re: Need advice on closing credit card

Thank you Marty for the advice I will keep the account open and use the card and hopefully I can get a decent credit limit! getting decreased from $10,000 to $1064 really (Hurts)Smiley Surprised

Message 3 of 18
Anonymous
Not applicable

Re: Need advice on closing credit card


@gingerflower wrote:

I was just informed my Chevron credit card which had a line of credit of $10,000 was decreased to $1064.00 due to no activity use. I could not use the card because where I reside there is no chevron/texaco...I have had this account since 2008 i hate to close the account because it will ruin my score!! I was informed today that we have a Midas auto center and it accepts Chevron/Texaco card. Should i close the account? Pls help..Smiley Frustrated


Closing a revolving credit account should have no effect on your credit score unless you're carrying a high balance (utilization) on that card.  A credit account, if closed in good standing, continues to report the the credit bureaus for up to 10 years so your Average Age of Accounts is not affected in any way.  By the time the account falls off your report after 10 years, your other accounts should have aged enough to offset any potential decline in AAoA.

 

Also, you need to understand why lenders sometimes decrease available credit.  Certain provisions of the CARD Act, enforced by the Office of the Comptroller of the Currency, require lenders to back each credit card issued with a certain amount of capital.  If you aren't using the card - which by your own admission you are not - you're tying up capital that could be used by another borrower, and possibly generate more profit for the lender.  So non-use is one reason why lenders will redeploy credit limits and the capital that backs such limits.

Message 4 of 18
Anonymous
Not applicable

Re: Need advice on closing credit card

True, closing account not only drops your score but also decreases the age of credit history which is huge impact of credit profile. never close any active accounts.

Message 5 of 18
marty56
Super Contributor

Re: Need advice on closing credit card


@Anonymous wrote:

@gingerflower wrote:

I was just informed my Chevron credit card which had a line of credit of $10,000 was decreased to $1064.00 due to no activity use. I could not use the card because where I reside there is no chevron/texaco...I have had this account since 2008 i hate to close the account because it will ruin my score!! I was informed today that we have a Midas auto center and it accepts Chevron/Texaco card. Should i close the account? Pls help..Smiley Frustrated


Closing a revolving credit account should have no effect on your credit score unless you're carrying a high balance (utilization) on that card.  A credit account, if closed in good standing, continues to report the the credit bureaus for up to 10 years so your Average Age of Accounts is not affected in any way.

 

 

It is possible that a closed account is deleted from your credit report prior to 10 years.  Keeping the account open allows you to have benefit for as long as you want plus some aompanies may not offer you another card down the road if you closed an account with them.

 

In any case there is no Fico benefit from closing a account and the account always help you so why close it?


 

1/25/2021: FICO 850 EQ 848 TU 847 EX
Message 6 of 18
Anonymous
Not applicable

Re: Need advice on closing credit card


@gingerflower wrote:

Thank you Marty for the advice I will keep the account open and use the card and hopefully I can get a decent credit limit! getting decreased from $10,000 to $1064 really (Hurts)Smiley Surprised


Do you mean that it hurts your feelings?  Or that it hurt your score?

 

If it hurt your score, that reveals that your CC utilization was higher than it should have been.  You can fix your score damage by paying your CC debt down (assuming the credit line decrease was accompanied by a big score drop).

 

Otherwise, great idea to keep it open by making a small purchase.  Be certain that any thing you buy using that card is something you genuinely want or need -- otherwise the purchases are translating in effect into you paying an annual fee to keep the card open.

Message 7 of 18
Anonymous
Not applicable

Re: Need advice on closing credit card


@gingerflower wrote:

I was just informed my Chevron credit card which had a line of credit of $10,000 was decreased to $1064.00 due to no activity use. I could not use the card because where I reside there is no chevron/texaco...I have had this account since 2008 i hate to close the account because it will ruin my score!! I was informed today that we have a Midas auto center and it accepts Chevron/Texaco card. Should i close the account? Pls help..Smiley Frustrated


Many people think closing an account will ruin their score, especially if it is the person's oldest account.  As others have explained, this is untrue.  The closed account will still contribute fully to all your age-related scoring factors until it falls off your report, which will be in almost exactly ten years from now (very small chance it could be deleted before or stay on after).

 

That said, I also agree with the other folks that, when we are talking about an old card with no annual fee, the user should be biased toward trying to keep it open, as long as he can do that by buying the occasional thing he actually wants or needs.  One purchase every 11 months is enough for a store card.

 

Would you mind telling me how many months went by of complete inactivity just before the credit line decrease occured?  (Making payments on a balance counts as activity.)

 

I collect case histories of "adverse action" (AA) taken by CC issuers that resulted from card inactivity.  These histories help the broader community here because they tell us how often a particular card type needs to be used if the person wants to prevent AA from occuring.

Message 8 of 18
gingerflower
Valued Contributor

Re: Need advice on closing credit card

It has been a year since I used the card bcuz where I reside the chevron station closed for service. However, I was informed midas auto service accepts the card. Believe me I understand why my limit was decrease bcuz of no activity!! At least the account was not closed!! Thk you for your advice.

Message 9 of 18
Anonymous
Not applicable

Re: Need advice on closing credit card


@Anonymous wrote:

True, closing account not only drops your score but also decreases the age of credit history which is huge impact of credit profile. never close any active accounts.


This is simply not true as already explained by a few contributors.

 

Ginger has not disclosed whether this is the oldest account and if so, by how much. Unless this card is the oldest by many many years, the effects of closing this card on score/profile will be insignificant if any when it drops off in 10 years. I'm firmly in the camp of closing cards you don't need or want unless it's the oldest by a few miles or if it has a HUGE limit (25k+), life is too short to monitor (fraud/exposure) and maintain (periodic charges) a bunch of useless SD cards.  I have closed 2 useless cards this year bringing total personal cards down to 6, effects on my scores = 0.

Message 10 of 18
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