Ask June > , , , > Closing credit card could be a bad thing

Closing credit card could be a bad thing

December 17, 2012 • J.J. Montanaro

Q: Hello, I am try­ing to buy a house and was told to not acquire new debts and keep my cur­rent credit cards to a zero bal­ance. Well my credit cards are paid off and have been for a few months but now upon call­ing 2 of the com­pa­nies, if I do not pur­chase any­thing within the next 30 days they will close my account. Should I go ahead and let them do that and not worry about it? Thanks.

–LaToya, US Air Force

A: Clearly your lender does not want your credit sit­u­a­tion to change and put eli­gi­bil­ity for your mort­gage in jeop­ardy. That makes sense and is a com­mon request as you approach clos­ing time on your new home. While I’ve never encoun­tered a credit card sit­u­a­tion like yours, appar­ently it can hap­pen. My con­cern is that if a cou­ple of your credit card accounts are closed it could neg­a­tively impact your credit sit­u­a­tion – just what you are try­ing to avoid. The edu­ca­tion cen­ter at myfico​.com does a great job of lay­ing out the fac­tors that con­tribute to your credit score. Review that infor­ma­tion and you may find that hav­ing a cou­ple credit cards closed could be a bad thing for a num­ber of those factors…at least in the short-term (credit uti­liza­tion ratio, type of credit, length of credit his­tory). Instead, con­sider giv­ing the credit card com­pa­nies a call back and request­ing that they extend your dead­line or using the cards for a minor pur­chase (can you say, “pack of gum”) just to keep them in the mix. You should also think about giv­ing your mort­gage lender a call and dis­cussing this sit­u­a­tion with them. Good luck.

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9 responses to “Closing credit card could be a bad thing”

  1. Jason
    December 27, 2012 at 2:43 pm |

    That is a form of extor­tion
    I would com­plain to the bet­ter buis­ness bureau about those companies

    1. Steve
      December 27, 2012 at 3:35 pm |

      This appears to be a mean­ing­less ques­tion. Any­one should know that you can charge some­thing on each card, in three days when it has posted to your account, you then pay the credit card com­pany. You do not have to wait to recieve a state­ment to make a pay­ment. This will insure that your credit card com­pany is sat­is­fied and the mort­gage co will see that you still have zero bal­ance. If you close those credit cards, you are guar­an­teed that your credit score will decrease

  2. Steve
    December 27, 2012 at 3:46 pm |

    If you do not know the day of the month that your credit card state­ments are issued, call the credit card com­pa­nies or look at you last bill. This is not rocket surgery, just keep it sim­ple. As a prospec­tive home owner, you are bound to be ner­vous but charg­ing $5 on each card is not going to knock you out of get­ting the mort­gage. I would say Good Luck but you don’t need that, you are already there. Again, keep the credit cards.

  3. rivaree
    December 27, 2012 at 4:14 pm |
  4. Lynn
    December 27, 2012 at 9:58 pm |

    Would clos­ing just one credit card, that charges me an annual fee, be detri­men­tal to my credit? I owe noth­ing to the card, but keep pay­ing the fee every year.??

  5. LTC James
    December 31, 2012 at 4:27 pm |

    Louie — No offense, my friend, but I know from prac­ti­cal expe­ri­ence, clos­ing credit card accounts can have a SEVERE effect on your credit score. When I went to make a sig­nif­i­cant pur­chase not too long ago, I thought the same way you do. How­ever, after hav­ing closed two accounts (a Mas­ter­Card and a Visa), my score went from 739 to 668. I was astounded! I was unable to reopen the accounts, even after explain­ing the cir­cum­stances to each com­pany. That move cost me in a sig­nif­i­cant inter­est increase. Long story, short: check with a ser­vice such as http://​www​.myfico​.com or http://​www​.cred​itkarma​.com before doing some­thing, first. They have cal­cu­la­tors that show what effects your actions will have BEFORE you do it.

  6. anthony
    January 1, 2013 at 7:08 am |

    If you can­not han­dle a cash salarie,you sure can­not han­dle any cre­dict cards!!

  7. Ann
    January 13, 2013 at 1:12 am |

    FYI… Bank of Amer­ica just closed a $5,000.00 credit card (account orig­i­nated a MBNA in 1996) of mine that had ZERO bal­ance!!! I noticed I had not received my new expi­ra­tion date card, and when I called to get a new card sent, they ran a credit report and closed my account because I had a few late pay­ments to OTHER accounts recently !!! Geniuses… NOT

  8. rtpike
    April 16, 2013 at 1:58 am |

    Peo­ple just tend to spend more when using credit cards…i know i do :)

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