If a credit card is closed as delinquent does the issuer have to keep reporting payments made?
Adam Rifkin stashed this in Credit
From the equifax blog:
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.
From the credit karma message board:
Honestly, the only i have seen people fix old delinquencies and collections information on their reports is using shady attorney who will attack and hound creditors until they remove them before the 7 year mark. They can even remove what is needed until you have a nice record again and almost 800 score to work your way up and up. Just so people know it does exist but not legit of course...
i find the insinuations in that message board post amusing, as if finance is conducted with any morality whatsoever. YES, using an attorney to brow beat your way into a better credit report can work. I know. I've done it and it's been worth every penny. However, it's not a one and done kind of thing. you have to be extremely vigilant w/r/t your credit and be prepared to handle the simpler issues yourself.
As for myself, I've repeatedly disputed literally everything on my credit report, had lawyers threaten lawsuits, had lawyers negotiate for me, even actually paid some of my old debts.... just to get my credit back into good territory.
When your personal financial life is on the line, FUCK MORALS. Do what you have to do to get yourself into a better position. No one cares about your feelings. They don't expect you to care about theirs. Everything is negotiable, even previous agreements.
As far as lawyers go, I've noticed that bringing in a lawyer, even if they're just on the line with you while you do all the damn talking, tells the other party that you're serious and that it's negotiation time. Just a couple months ago I paid an attorney $500 for 15 minutes of work, but it saved me $4000 and an end of years of headache.
Thank you for the insight, Jason.
How do you find a good lawyer to represent yourself in matters like these?
Is it all referrals?
It does seem worth it to get representation.