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Ask Dr. Don

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.

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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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See Also
Step-by-step guide to credit cards
How to cancel a credit card -- the right way
Financial advice glossary
More Dr. Don stories


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