Credit card issuers occasionally close accounts, usually to mitigate their own risk or due to lack of activity. However, an account closure can have a negative impact on your credit. In a new article, The Independent discuss some steps you can take to preserve your credit if your credit card issuer decides to close your account without prior notice.
Look For an Alternative
- Ask the issuer to reconsider:
Before the account is officially closed, call the customer service number on the back of your card and see if the issuer will reconsider their decision. There’s no harm in trying, and you may be able to explain why you haven’t been using the card and assure them that you will use it more frequently. - Seek an alternative if the issuer says ‘no’:
If the issuer refuses to keep your credit card open, consider applying for a new card with a different issuer. This will help counteract the negative impact of an account closure on your credit. Keep in mind that applying for a new credit card may result in a temporary drop in your credit score due to a hard inquiry. However, with responsible card use, your score will recover over time. - Consider these steps when applying for a new credit card:
- Review your credit score: Check your credit score to determine which credit cards you are likely to be approved for. Many credit card issuers offer free credit scores, or you can use a third-party personal finance website.
- Use issuer’s screening options: Look for issuers that offer pre-qualification or preapproval. This can help you understand your likelihood of approval and avoid unnecessary hard inquiries on your credit report.
- Research credit card options: Look for credit cards with qualifying credit score ranges that match your credit profile. Different cards offer different benefits and rewards, so choose one that suits your needs.
Diversify your credit:
To safeguard your credit further, consider having more than one or two credit cards with different issuers. This way, if one card is lost, stolen, or closed, you will have backup cards to rely on. This can also minimize the impact of an account closure on your credit in the future.
Summary
If your credit card issuer decides to close your account, take action to protect your credit. Contact the issuer to see if they can reconsider their decision. If not, apply for a new credit card with a different issuer to counteract the negative impact on your credit score. Remember to review your credit score, use screening options, and research credit card options before applying. Consider diversifying your credit by having multiple credit cards to mitigate the impact of an account closure. By taking these measures, you can ensure that your credit remains strong even in the face of unexpected account closures.