For the financial experts out there, Capital One is going to close my credit card due to inactivity. I called them and they said there is no possible way they could reopen it because its been flagged for closure, even after being sent up the chain. The problem is it's my oldest account, going over 10 years. It was a relatively small amount of credit, so I'm not worried about that, but my main card, USAA is only a few years old. I've always had an excellent credit rating, no missed payments, and a few loans paid off, but I think a good portion of that was due my long credit history. The reason this is a problem is I'm planning on buying a house this summer as soon as my current lease expires. How will this affect my credit rating?
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Capital One Closed my Credit Card...Credit Rating
- Thread starter puck_11
- Start date
Probably no impact, but there is a potential for Capital One to screw up an entry; e.g., reason for cancellation, sooo keep a sharp eye one your credit reports.
I would recommend keeping two credit cards. Recommend Navy Federal Credit Union card in addition to USAA. Having said that I only have one credit card; was on a long trip and NFCU saw some questionable charges (far away places, fast mover) and locked my account - after calling home and leaving a voice message of their action. Of course I was thousands of miles away, and ended up without a credit card. So will take my own advice and apply for another card.
I would recommend keeping two credit cards. Recommend Navy Federal Credit Union card in addition to USAA. Having said that I only have one credit card; was on a long trip and NFCU saw some questionable charges (far away places, fast mover) and locked my account - after calling home and leaving a voice message of their action. Of course I was thousands of miles away, and ended up without a credit card. So will take my own advice and apply for another card.
Credit scoring has a lot of moving parts to it, but it sounds like you should be ok; in fact, more than ok. What generally matters is how you pay your bills, and if you've always been on-time and in full, you'll be looking pretty good. The fact that you've also had multiple types of credit (installment debt as well as revolving debt) is also good - and even better that you paid them on time. Having an account closed for inactivity shouldn't really hurt at all, especially if it was for a small max credit limit - the total credit you have available is a scorable item, so if this was a small percentage than you should be ok. Like the Chief said, it's a good idea to have more than one credit card so you don't get stuck in a jam; just don't have 20 of them.
This is a pretty good summary of credit scores and how they work: http://www.bankrate.com/brm/news/credit-scoring/20031104a1.asp
This is a pretty good summary of credit scores and how they work: http://www.bankrate.com/brm/news/credit-scoring/20031104a1.asp
Thanks all! I did call up USAA to talk to a financial adviser about this and he said it really should have no effect. I wasn't worried about not getting a home loan, I was more concerned with getting the best possible rates since interest adds up quickly on a home mortgage.
USNMark
Member
How true that is; I liked that post the best. One of those moving parts is the credit history itself. While I agree that you miiiight not have a whole lot to worry about (based on the other things you mentioned that strengthen your score), I would definitely NOT say that it will probably have no effect. You said that this credit card could be your oldest account. If your oldest account--indeed the beginning marker in your credit history--is closed, that removes however many years of good credit history that chunk represents. It's never a good thing when your oldest/earliest piece of credit is closed. Whether that's going to have a significant or minimal impact won't be known until you check your credit score again.
Good thing to be concerned about but if you are in a position to buy right now, you have the potential to make out like a bandit. Interest rates are EXTREMELY low right now, and though there is a shortage of liquidity (also the reason for the low interest rate), you could find a smoking deal on a house depending on the area of the country you are in.
That being said no one yet knows exactly how long this mess is going to last and you might not see a return on your investment for some years. Rate wise you're probably in a good position.
Agree with the above. We just closed on our house Monday. The age of our oldest account was definitely looked at. Mortgage companies are getting much stricter on how much money they give out these days and to whom. Of course it all depends on what kind of loan you are going for, ie VA, Conventional, no money down, etc.