Credit Tips: What to do When an Issuer Closes Your Credit Card Credit Tips: What to do When an Issuer Closes Your Credit Card | Equifax Finance Blog

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Credit Tips: What to do When an Issuer Closes Your Credit Card

Written by Equifax Experts on December 9, 2013 in Credit  |   5 comments

Few things are more humiliating than trying to pay for an item with your credit card only to be told the card is declined. But in addition to the embarrassment this can cause you in a crowded store, the closed account can also impact your…

information on my credit reportFew things are more humiliating than trying to pay for an item with your credit card only to be told the card is declined. But in addition to the embarrassment this can cause you in a crowded store, the closed account can also impact your credit score.

A creditor may close an account because:

  • The card is inactive with no outstanding balance.
  • The creditor no longer offers the terms of the account.
  • The creditor has reasons that may go undisclosed but that can include an issuer terminating the account based on information in your credit report.

Learning that your account has been closed can be startling because card issuers aren’t required to warn you when they plan to deactivate a card or sever your line of credit. Creditors are able to close an account for delinquency, inactivity, or default with no advance notice. And when the account is closed for some other reason, it’s only necessary for creditors to inform the cardholder 30 days after the account is closed.

How does having this information on my credit report affect my credit score?

Even when an issuer closes an account, the closed account can still affect your credit score in a couple of ways. The closure affects the average length of your credit history, which factors into your credit score. If the closed account was a longstanding one, it could negatively affect your score.

Your credit score could also be affected if your credit utilization rate—how much of your available credit you are using—is too high as a result of the closure. For example, let’s say you have two credit cards, and each card has a $1,000 limit. One has no balance, and the other has a balance of $500.

If the creditor closes the inactive card with no balance, your credit utilization rate jumps from 25 percent to 50 percent. Depending on your full credit profile, this can negatively impact your credit score because approximately 30 percent of your score is based on how much of your total credit line is being used (with a high percentage being a red flag to some lenders).

What can I do if an issuer closes my credit card?

Once a creditor closes your card, there are a few steps you can take.

1. Get a copy of your credit report. Check and make sure the account is accurately reported as “closed” or “closed at lender’s request.” Also scan your report for outstanding balances, and take steps to pay down these outstanding debts. This can help decrease your credit utilization rate and positively impact your score.

Keep in mind that closed accounts do not simply fall off your credit report, and you should periodically check your report to ensure that closed account information has fallen off your report after a certain amount of time:

  • Closed accounts paid as agreed can remain on your report for up to 10 years.
  • Closed accounts that have been charged off can remain on your report for seven years plus 180 days from the start of the delinquency that led to the charge off.
  • Closed accounts in collections can remain on your credit report for seven years plus 180 days from the date the account first became past due.

2. Contact the credit card company. Ask for an explanation of why the card was canceled. Sometimes talking it over with a creditor can be enough to restore the account; other times the decision will stand.

Either way, by contacting the issuer directly you may be able to find out why the creditor closed your account—and you may also learn of any mistakes you made with this account that you should avoid in the future.

3. Take time to reassess your finances after the card is canceled. Whether your card was closed due to inactivity or because of late payments, it’s time to assess how you’re currently using credit. Should you be putting small purchases on your credit card and paying them off immediately? Or should you stop using your credit card entirely until you’ve paid down your outstanding balances?

After your credit account is closed, concentrate on adding positive information to your credit file. You can do that by paying your credit card bills on time, keeping your credit utilization rate below 30 percent, and making periodic purchases to prevent your credit card from lapsing into inactivity.


  1. Jennifer Keller says:

    Reducing your credit limit as you pay down your debt can help keep you from using your card on any more purchases while also reducing your credit score but is a good idea if it helps you to stay on the path to financial freedom.

  2. Kristy B. says:

    What happens when a creditor closes the account due a violation to the user agreement…it was not due to non payment or low/high usage. It was a small fine print in regards to where i was charging.

  3. Anonymous says:

    what about when they close the account saying you hve some kind of legal action pending against and you get a copy of your credit report and go to your circuit clerk and the accusation is unfounded you have no balace and always paid on time and there is no legal action can you sue the credit card company for saying false information and ruining your credit score?

  4. Angela T. says:

    I think your Credit Utilization for closed account is incorrect…Either Equifax MUST only factor in the balance owed on the closed account in Credit Utilization or you must consider the original balance with available credit (which makes no sense)…My credit utilization is being affected by 16% because you are using the original balance to determine my credit utilizatioon rather than the balance owed….How will this be fixed.

  5. Amber Smith says:

    So what happens when your card has been cancelled out???is my money still in the bank is it that the card is cancelled bit and still can go inside the bank to get my money..

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