Retail store bankruptcy and charge cards

[Anonymous]

With the bankruptcy/closing of retail stores around the nation, how will this affect those of us with charge cards for those businesses in relation to credit score. 

I have a Mervyns card from 2003 with a zero balance and high amount availibility which I would use to keep the account active and would pay the monthly balance in full and now it just sits lonely and useless.  Should I expect my score(s) to lower because of the store's passing?

Mahalo!

[SCF]

Hey mele,

If your Mervyn's card is closed (which I assume it will be), and is in good standing, which it sounds like it is, the account will remain on your reports for 10 years and continue to show positive payment history and affect your AAoA.  The only possible negative effect in the short-term is that your utilization % may increase because of the loss of the CL from the closed account. 

If your util is already low, or you can get another card or CLIs to replace the lost limit, then losing this card will not affect your score at all until it drops off your report in 10 years.  You may hear that having a "closed by grantor" notation on your account could look bad on a manual review for a mortgage or other large loan.  I don't think this is the case, if it comes up when you apply for a mortgage just tell the truth and point out your positive payment history and I doubt your lender will even bat an eye.

Some good resources for you to look at are: Credit Scoring 101, the myFICO PDF Booklet, and fused's guide to Closing CC's.

Hope that helps!

[laz98]

a lot of us are waiting around to see what will happen to the mervyns card.  mine is still open, so far.

[Anonymous]

Thank you. Excellent point! My payment history is great so here's hoping that it holds over well when the card is closed.  Aside from student loans from my grad program (roughly $16,000) and my auto loan ($11,500 left), all other debt balance is low or zero , and I am so close to breaking 800 I can taste it.