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How to Fix a Closed Credit Card Account

    

SUMMARY: Learn how a closed credit card account affects your credit score and what you can do to fix any negative impact it may have.

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Just because a credit card account is closed, doesn’t mean that it’s been removed from your credit report. In fact, closed accounts remain on your credit report for many years, which can be good or bad, depending on your payment history.

How Does Closing a Credit Card Account Affect Your Credit?

If an account is closed in good standing, having that positive payment history on your credit report certainly is not a bad thing. But, a closed credit card account can affect your credit negatively in a few different ways:
  1. Credit mix. Lenders like to see that borrowers can handle different types of credit, including credit cards and other types of loans such as auto loans or mortgages. If this is your only credit card, closing the account will hurt your credit.

  2. Credit utilization. When a credit card account is closed, this lowers the amount of credit you have available to you, thus increasing your credit utilization rate. Higher credit utilization translates to lower credit scores.

  3. Average age of accounts. If your credit card account was open for a long time, closing the account can decrease the average age of your accounts. When it comes to borrowing money, the longer your credit history, the better.   

Reasons for Closing a Credit Card Account

Credit card accounts can be closed by the lender or the borrower. If a lender closes your account, it is probably due to inactivity or delinquency. To avoid having an account closed, always pay your bills on time, and use your card at least every few months for small purchases, then pay them off in full. 

Sometimes borrowers may choose to close their credit card accounts due to poor customer service or high fees. Before you decide to close a credit card account you don’t use or are unhappy with, look at the fees associated with the card. If there are no annual fees, it may be worth keeping the account open.

How to Reopen a Closed Credit Card Account

If your account was closed by the creditor and you would like to reopen it, give them a call. Some companies will reopen it for you after a credit check, while others have a policy not to, but you never know unless you ask. If you cannot reopen the account, you can always apply for a new credit card to offset any harm the closed account is causing to your credit score

How to Dispute a Closed Credit Card

As we mentioned before, closed accounts remain on your credit report for a long time — up to 10 years, but should you try to get closed accounts off of your credit report? If the account was closed in good standing, don’t bother, it is helping your payment history. But if the account was closed due to missed payments, check your credit report regularly to make sure that negative marks are removed from the report after 7 ½ years. If they remain there for longer, file a dispute. Sometimes lenders make errors in reporting, so if you see a negative mark on your credit that is inaccurate, make sure to follow up with your lender or file a dispute.

While you can’t always have a closed account removed from your credit report, there are other ways to help bring your score back up. You can call your other lenders and ask for a credit limit increase, which will help to bring down your credit utilization, or you can apply for a new credit card.

If you are looking for a credit card with a low APR and no annual fees, check out TDECU today.

 

Sources: 

https://money.usnews.com/credit-cards/articles/how-to-remove-a-closed-account-from-your-credit-report

https://www.experian.com/blogs/ask-experian/removing-closed-good-standing-accounts-from-report/

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