Which is better....

[Anonymous]

Is it better to close an account yourself, or have it closed for inactivity by the issuer?  Or does it matter?

Trying to help my wife, she has a FingerHut account that is almost paid off but we have no interest in paying more exorbitant prices to keep them reporting.  Is it better to just let it be, reporting open and never late until they finally close for inactivity, or close it preemptively, hurting ratios and account age?

[Anonymous]

I would just let it age, but there are plenty of people that know way more than me!

[SouthJamaica]

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@Anonymous wrote:

Is it better to close an account yourself, or have it closed for inactivity by the issuer?  Or does it matter?

Trying to help my wife, she has a FingerHut account that is almost paid off but we have no interest in paying more exorbitant prices to keep them reporting.  Is it better to just let it be, reporting open and never late until they finally close for inactivity, or close it preemptively, hurting ratios and account age?

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1. First pay it off.

2. Then close it (better for it to report "closed at consumer's request").

[Anonymous]

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@SouthJamaica wrote:

 
1. First pay it off.

2. Then close it (better for it to report "closed at consumer's request").

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That was what I needed to know, that there is a difference in reporting who closes it.  And yeah, pay it off is a given Thanks

[Thomas_Thumb]

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@Anonymous wrote:

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@SouthJamaica wrote:

 
1. First pay it off.

2. Then close it (better for it to report "closed at consumer's request").

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That was what I needed to know, that there is a difference in reporting who closes it.  And yeah, pay it off is a given Thanks

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Actually, there is no difference in score relative to the text in who closed the card. Text is not a scoring factor. I stopped using a store card which was non value add and the store closed it 4 years later due to inactivity.

Absolutely no negative implications to score associated with a card being closed due to inactivity as opposed to being closed by consumer.

[SouthJamaica]

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@Thomas_Thumb wrote:

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@Anonymous wrote:

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@SouthJamaica wrote:

 
1. First pay it off.

2. Then close it (better for it to report "closed at consumer's request").

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That was what I needed to know, that there is a difference in reporting who closes it.  And yeah, pay it off is a given Thanks

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Actually, there is no difference in score relative to the text in who closed the card. Text is not a scoring factor. I stopped using a store card which was non value add and the store closed it 4 years later due to inactivity.

Absolutely no negative implications to score associated with a card being closed due to inactivity as opposed to being closed by consumer.

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"Closed by creditor or consumer? A lesser concern is whether the account is marked as “closed by creditor” as opposed to “closed at consumer’s request”. Since FICO doesn’t release the details of their scoring algorithm, it is still debated whether this matters to the numeric score. Some credit repair experts say it does, others disagree. However, if someone does a manual review of your credit report, it can raise some questions as to why the account was closed by the lender."

http://www.mymoneyblog.com/more-inactive-credit-cards-being-closed-protect-your-fico-credit-score.html

Since OP has the option of taking either path, there's no reason to take the chance that it could be read negatively by some lender in the future.

[SouthJamaica]

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@SouthJamaica wrote:

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@Thomas_Thumb wrote:

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@Anonymous wrote:

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@SouthJamaica wrote:

 
1. First pay it off.

2. Then close it (better for it to report "closed at consumer's request").

---

That was what I needed to know, that there is a difference in reporting who closes it.  And yeah, pay it off is a given Thanks

---

Actually, there is no difference in score relative to the text in who closed the card. Text is not a scoring factor. I stopped using a store card which was non value add and the store closed it 4 years later due to inactivity.

Absolutely no negative implications to score associated with a card being closed due to inactivity as opposed to being closed by consumer.

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"Closed by creditor or consumer? A lesser concern is whether the account is marked as “closed by creditor” as opposed to “closed at consumer’s request”. Since FICO doesn’t release the details of their scoring algorithm, it is still debated whether this matters to the numeric score. Some credit repair experts say it does, others disagree. However, if someone does a manual review of your credit report, it can raise some questions as to why the account was closed by the lender."

http://www.mymoneyblog.com/more-inactive-credit-cards-being-closed-protect-your-fico-credit-score.html

Since OP has the option of taking either path, there's no reason to take the chance that it could be read negatively by some lender in the future.

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Here's an article supporting T_T's opinion:

"Narrative of credit card closed

When a credit card account is closed a comment or “narrative” is often included on the consumer's credit report in order to provide additional information regarding the closure.

If a consumer closes his credit card the narrative would read, “Account closed by consumer." On the other hand if the account was closed by the credit card issuer then the narrative would read "Account closed by credit grantor." There’s also a third, less common, method of reporting an account closure that is simply, “Account closed.”

Credit score impact

The narratives or comments that are included on a consumer's credit report can negatively impact credit scores.

However, the narratives which indicate how the account was closed are benign and have no impact on credit scores. That wasn’t always the case as much older credit scoring models did consider “Account closed by credit grantor” to be negative.""

http://www.thecreditsolutionprogram.com/does-it-matter-if-credit-card-closed-by-creditor

Call me old fashioned, then, but I'd much prefer "closed by consumer" in my reports.

[Thomas_Thumb]

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@SouthJamaica wrote:

"Closed by creditor or consumer? A lesser concern is whether the account is marked as “closed by creditor” as opposed to “closed at consumer’s request”. Since FICO doesn’t release the details of their scoring algorithm, it is still debated whether this matters to the numeric score. Some credit repair experts say it does, others disagree. However, if someone does a manual review of your credit report, it can raise some questions as to why the account was closed by the lender."

http://www.mymoneyblog.com/more-inactive-credit-cards-being-closed-protect-your-fico-credit-score.ht...

Since OP has the option of taking either path, there's no reason to take the chance that it could be read negatively by some lender in the future.

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SJ,

There is NO negative associated with accounts that are closed due to inactivity assuming they are closed in good standing. Of course, if a consumer closes an account, you want it closed in good standing also. Accounts closed due to inactivity are not viewed as a credit risk.

The potential impact on score is the loss of the credit line and reduced # of open accounts. That happens when the account is closed regardless of whether the consumer or the issuer closes the account.

I generally recommend not closing revolving accounts with no annual fee even if they are not used. As some would say "sock drawer" the card and allow the issuer to close it at some later date often years down the road. That way there will be more years on file before it drops off the report. However, if there are concerns that an unused card could get misplaced and used fraudulently then closing the account would be best.

[mitchblue]

I had a card closed a couple years ago by them and it still said "closed at consumers request."

[Anonymous]

The comments may not be a factor with respect to actual score, but the score isn't everything, right?

If one was borderline, and rather than an instant approval, the application went into one of those 7-10 day, 30 day , or whatever 'We need to further review' message pops up, then the comments could then make a difference, could they not?

As a credit grantor, I'm pretty sure I would be looking at closed accounts too. It's analogous to looking at resumes. Why did you leave your last job? Did you quit ro were you let go?

Did the credit grantor drop you or did you drop them?

And seeing as they probably spend 2-3 minutes 'reviewing' these reports, they probably are not going to look into the whys and hows of why the creditor closed the account, just that they did it. 

I know I'm throwing a lof of 'I think, therefore it must be true' into this, but I guess I am following the principle that if you have a choice, take the route with less chance of it having a negative effect.