Will A Credit Card Closed For Non-use Hurt My Credit Score?

[Anonymous]

I opened a BP gas card from Synchrony about 6 months ago, and only used it once and then PIF. I stopped using it right after I got it because my route changed and there isn't a BP on my normal route anymore. Anyway, it was closed yesterday for non use (I am thinking). Is this going to hurt my credit score? Equifax reported it as a "Paid Loan $0.00" so I checked the account this morning and it said it was closed. 

[Anonymous]

Won't have any effect.

[Anonymous]

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@Anonymous wrote:

Won't have any effect.

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I am curious, had I closed the account myself knowing I wouldn't be able to really make use of the card, would that have hurt my credit score? I ask because I have a couple store cards that have been PIF and I just haven't had any desire to use them, but I left them open thinking that having them open with a zero balance would be good for the length of credit and utilzation on my report. 

[Anonymous]

Closing an account with no annual fee isn't useful unless it's painful for you to monitor them monthly to make sure no charges came through.

One area you do not want to mess with is your OLDEST account if you don't have any other accounts that old.  FICO does look at the age of the oldest open account (I believe), so closing an old open account with nothing else to back that age up might be detrimental to your score.  This oldest open account seems to reflect in "age of credit history" (my opinion).

I never close accounts if they don't have annual or monthly fees.  I have a credit card that is my oldest at 5.1 years, I never use it, but it's my oldest by a huge margin.  I put a $5 charge on there every quarter and pay it off quickly.

[Anonymous]

Good reply by ABCD.  FICO does indeed look at "Age of Oldest Account."  A closed account still counts as a possible oldest account, but eventually it will fall off, so it is best to keep one's oldest credit card open, unless there are annual fees to do so.

I am really interested in the fact that this account was closed by the issuer after such a small period of nonuse.  Usually it has to be more.  Would the OP mind answering a few more questions?  The answers would really help us out:

(1)  When was the transaction date for the one (and only) time this card was used?

(2)  Did you immediately pay the card to $0 after the charge, or did you wait until the first statement appeared with a positive balance?  (I am trying here to figure out whether all of your statements were $0.)

(2a)  When did this card typically have a statement each month?  (e.g. around the 2nd of the month, or the 11th, or the 25th?  Etc.)

You write:

"Equifax reported it as a "Paid Loan $0.00" so I checked the account this morning and it said it was closed."

(3)  Are you saying that for the last 5-6 months, the account has been listed as a paid loan?  (For example, you saw your EQ report three months ago and the card was listed at that time as a "paid loan"?)  That in itself was strange, since it was not a loan but a credit card. 

(4)  Is there anything else that could account for the issuer closing it?  For example, has your utilization on any of your cards gone way up?  It sounds like you are not 100% sure it was closed due to inactivity.

[HeavenOhio]

It won't matter if you closed it or if the bank closed it. The only possible ding I can think of is if the closure causes you to have a larger percentage of accounts reporting a positive balance. If that happens, it's not likely to be a big deal.

Adding to what ABCD says, reasons to decide to close an account might include:

• Too mahy cards to manage
• Eliminating a retail card that's isn't likely to be used
• A bank annoys you

[Anonymous]

Great reply by Heaven.  To summarize his and ABCD's  ideas, I think the decision tree for closing a card looks somthing like this:

Reasons to consider keeping it open:

*  It is significantly older than all your other cards.

*  Closing it would substantially reduce your total credit limit.  (FICO doesn't care about the size of your credit limit, but it does like it when your utilization is low.)

*  You currently have three or fewer credit cards.  (3+ is required for optimal scoring.)

Reasons to close it:

*  It has annual or monthly fees, and the fees outweigh its advantage.  (This is a lot more common than people realize.)  If so, consider whether you can do a product change to a no-annual-fee card made by the same issuer.

*  Too many cards to manage
*  Eliminating a retail card that's isn't likely to be used (store cards are considred a minor negative by the insurance industry)
*  A bank annoys you

If a person has substantial reasons both to close it and to keep it open, he should circle back with the folks in the forum and get advice on how to make the final decision.

[Anonymous]

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@Anonymous wrote:

Good reply by ABCD.  FICO does indeed look at "Age of Oldest Account."  A closed account still counts as a possible oldest account, but eventually it will fall off, so it is best to keep one's oldest credit card open, unless there are annual fees to do so.

I am really interested in the fact that this account was closed by the issuer after such a small period of nonuse.  Usually it has to be more.  Would the OP mind answering a few more questions?  The answers would really help us out:

(1)  When was the transaction date for the one (and only) time this card was used?

(2)  Did you immediately pay the card to $0 after the charge, or did you wait until the first statement appeared with a positive balance?  (I am trying here to figure out whether all of your statements were $0.)

(2a)  When did this card typically have a statement each month?  (e.g. around the 2nd of the month, or the 11th, or the 25th?  Etc.)

You write:

"Equifax reported it as a "Paid Loan $0.00" so I checked the account this morning and it said it was closed."

(3)  Are you saying that for the last 5-6 months, the account has been listed as a paid loan?  (For example, you saw your EQ report three months ago and the card was listed at that time as a "paid loan"?)  That in itself was strange, since it was not a loan but a credit card. 

(4)  Is there anything else that could account for the issuer closing it?  For example, has your utilization on any of your cards gone way up?  It sounds like you are not 100% sure it was closed due to inactivity.

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The transaction date was back in June, the card was opened in May. The statement was made available by the 3rd of the month, and looking back I only used it once in June and I PIF before I received a statement. So yes, all of my statements were at $0.00.  

It was listed this morning as a "paid loan with $0.00 balance." Prior to this, it was listed as open and in good standing. 

I have less than 30% utilization on my credit cards. 

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Good reply by ABCD.  FICO does indeed look at "Age of Oldest Account."  A closed account still counts as a possible oldest account, but eventually it will fall off, so it is best to keep one's oldest credit card open, unless there are annual fees to do so.

I am really interested in the fact that this account was closed by the issuer after such a small period of nonuse.  Usually it has to be more.  Would the OP mind answering a few more questions?  The answers would really help us out:

(1)  When was the transaction date for the one (and only) time this card was used?

(2)  Did you immediately pay the card to $0 after the charge, or did you wait until the first statement appeared with a positive balance?  (I am trying here to figure out whether all of your statements were $0.)

(2a)  When did this card typically have a statement each month?  (e.g. around the 2nd of the month, or the 11th, or the 25th?  Etc.)

You write:

"Equifax reported it as a "Paid Loan $0.00" so I checked the account this morning and it said it was closed."

(3)  Are you saying that for the last 5-6 months, the account has been listed as a paid loan?  (For example, you saw your EQ report three months ago and the card was listed at that time as a "paid loan"?)  That in itself was strange, since it was not a loan but a credit card. 

(4)  Is there anything else that could account for the issuer closing it?  For example, has your utilization on any of your cards gone way up?  It sounds like you are not 100% sure it was closed due to inactivity.

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The transaction date was back in June, the card was opened in May. The statement was made available by the 3rd of the month, and looking back I only used it once in June and I PIF before I received a statement. So yes, all of my statements were at $0.00.  

It was listed this morning as a "paid loan with $0.00 balance." Prior to this, it was listed as open and in good standing. 

I have less than 30% utilization on my credit cards. 

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Wow!  This is really helpful.  So just to clarify, although based on your first post we might have thought that the card was opened and used six months ago, the time line is actually much less.  It was used in June (probably after June 3) and then in less than 120 days it was closed by the issuer.

That's a huge outlier.  It's definitely what happened, but it is wildly different from the usual timeline (for closure due to inactivity).  Usually it takes over a year, though we have had a few cases of Wells Fargo closing at month 8.  Thus what happened here is so wildly different from previous cases that it is either a complete freak event or it has something to do with Synchrony wanting to see at least one statement with a positive balance in the first 90 days (or perhaps both).

It would be interesting to see what the issuer would say if you asked them about it.  E.g. can they confirm that it was closed due to inactivity?  (Not some other reason.)  And do they realize that it was only a few months since the date of last activity?

Curious to hear thoughts from others on this.