{"id":52374,"date":"2023-08-24T06:12:09","date_gmt":"2023-08-24T10:12:09","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/3-steps-to-protect-your-credit-score-if-a-credit-card-closes-your-account\/"},"modified":"2023-08-24T06:12:11","modified_gmt":"2023-08-24T10:12:11","slug":"3-steps-to-protect-your-credit-score-if-a-credit-card-closes-your-account","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=52374","title":{"rendered":"3 steps to protect your credit score if a credit card closes your account"},"content":{"rendered":"
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This <\/em>article<\/em> is reprinted by permission from <\/em>NerdWallet<\/em>.\u00a0<\/em><\/p>\n

It\u2019s not uncommon for credit card issuers to close accounts. Sometimes they do so to lessen their risk when the economy is in distress, generally as a reaction to your spending activity \u2014 or lack thereof.<\/p>\n

After all, issuers make money from every tap or swipe, so inactive cards aren\u2019t fruitful for them.<\/p>\n

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\u201cIf you\u2019re not paying an annual fee and you\u2019re not using the card, you\u2019re below the zero revenue line, you\u2019re actually costing the card issuer money every month,\u201d says John Ulzheimer, a credit expert formerly with FICO
\n FICO,
\n +1.94%<\/bg-quote>,<\/span>
\n a credit-scoring company, and Equifax
\n EFX,
\n +2.25%<\/bg-quote>,<\/span>
\n a major bureau that provides consumer reports. \u201cEventually they\u2019re going to close your account because you\u2019re not generating any swipe-fee income.\u201d<\/p>\n

An\u00a0account closure\u00a0can harm your credit, but if you\u2019re fortunate, a credit card issuer might send you a notice as a courtesy beforehand. That can provide you time to make some moves to counter any negative impact to your credit scores. Regardless, if you take no actions, it could take longer for your credit to bounce back.<\/p>\n

Ask the issuer to reconsider<\/strong><\/h2>\n

Before the account is officially closed, call the customer service number on the back of your card to see whether the issuer will reevaluate the decision. There\u2019s no guarantee, but there\u2019s also nothing to lose by trying.<\/p>\n

If the notice the issuer sent provided a reason for the account closure, use it to make a case. For instance, if the decision is due to an inactive card, let the issuer know you plan to use the card more.<\/p>\n

One way to ensure consistent use:\u00a0Set up autopay\u00a0with the card for a recurring subscription.<\/p>\n

Also see:<\/strong> 3 signs your credit cards need a time-out<\/p>\n

Seek an alternative if the issuer says \u2018no\u2019<\/strong><\/h2>\n

For Jake Dube, an engineer based in Ohio, there wasn\u2019t much room for negotiation when his credit card issuer changed terms and presented him with an ultimatum. He would have to pay a monthly fee or opt out and have his account closed. \u201cI opted out and it shut the account down,\u201d he says.<\/p>\n

An account closure can affect how much total available credit you\u2019re using. It\u2019s a key factor that impacts\u00a0your credit scores. \u201cThe amount of the score impact is going to be variable based on the amount of credit card debt and the other credit cards you have on your report,\u201d Ulzheimer says.<\/p>\n

So if a credit card issuer refuses to keep your credit card open, try countering those effects by\u00a0applying for a new one\u00a0with a different issuer.<\/p>\n

Dube, who\u2019d already used the old card to build credit, didn\u2019t waste time getting a new card. \u201cI applied for it the same day I opted out,\u201d he says. \u201cThey accepted it within 24 hours.\u201d<\/p>\n

Plus<\/strong>: Alternative credit cards can help you build credit, but it could be wild ride<\/p>\n

Be aware that when you submit a new credit card application, the issuer will typically conduct a\u00a0hard inquiry\u00a0on your credit, which can also cause your credit scores to drop temporarily. They will rebound, however, with\u00a0responsible card use, including paying on time and, ideally, in full every month.<\/p>\n

Some steps to consider include:<\/p>\n