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Ask Dr. Don
By
Don
Taylor,
Ph.D.,
CFA
•
Bankrate.com |
Closing inactive accounts
I
Dear Dr. Don,
I'm pretty sure that I have open credit card accounts.
However, I don't know with whom because I cut up my cards and didn't
bother to close the accounts. How can I find out and then cancel them?
Thank you,
Dave Debt-free
Dear Dave,
Get a copy of all three credit reports. Bankrate provides the contact
information for the credit bureaus in its Guide
to Managing Credit. The reports will show the account relationships
and provide the contact information for each creditor. Negative
information about an account stays on your credit report for seven
years, but the report will list all of your open accounts even if
they are inactive.
Make sure that canceling the cards is the right move
for you to make. If the goal is to raise your credit score, then
canceling these inactive accounts isn't the right move. This Bankrate
feature
has more about why you shouldn't cancel the cards when you're trying
to raise your credit score.
Closing inactive accounts II
Dear Dr. Don,
How should I close all of my accounts that I have not used in a
number of years? They are still showing up on my credit report.
Robby Remainder
Dear Robby,
Ask yourself what your goal is in closing these accounts. Are you
trying to raise your credit score, free up some debt capacity or
just do some housekeeping on your credit report?
As I told Dave in the previous reply, closing accounts
isn't a good short-term strategy for increasing your credit score.
Creditors are looking for signs that you can manage credit responsibly.
One way that they measure that is by looking at your account balances
as a percentage of the total amount of credit available to you.
If you close down the inactive accounts, you may free up some debt
capacity but you'll also increased your percentage of debt utilization.
Creditors aren't going to be all that concerned about open credit
lines that you haven't touched in years.
Closing an account won't remove any negative credit information
reported about the account. Positive information can remain on the
account indefinitely.
If you do close an account, make sure that you have the creditor
report that the account was closed at your request. That shows that
you were the decision maker in closing the account and not the creditor.
This Bankrate feature
has more about closing credit card accounts the right way.
-- Posted: Jan. 27, 2004
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