PSA on the evils of credit card companies


I have heard in the media that various credit card companies are closing down accounts with $0 balance and no activity for a certain length of time. I've gotten two letters in the past few months; one notifying me that my account was going to be closed unless I requested by a certain date that it remain open, and one notifying me that my account had already been closed and there was nothing I could do about it. Nyah Nyah Nya-Nya Nya.

Everyone knows that you can request your credit report for free once per year, right?

I have mine set up on a schedule so that I request one report from each of the three companies every four months. I just checked my report from Equifax (the other two are Experian and Transunion), and was quite surprised at what I found. No less than 6 of my credit card accounts were closed in 2008, all but one since August. These were some of my longest standing accounts. These were the accounts contributing to my healthy credit score.

We all know that having credit you are not using, and having credit that has been established for several years, is good for your FICO score.

Two of these accounts were opened in 2005; Three were opened in 1999; One was opened in 1996.

Did you hear that? That was my FICO score taking a nosedive.

If you are curious about the offending companies, 2 cards were from Chase, 3 cards were store cards through GEMB (G.E. Money Bank), and 1 card was from Discover.

I am not a financial planner, and I am not offering any financial advice. However, I have read in various places that if you would like to prevent these types of accounts from being closed, it may be helpful to use the cards periodically to make purchases (THAT YOU WOULD NORMALLY MAKE--gas, groceries, etc), that you will then PAY OFF before the grace period ends.

*No need to incur more debt just to keep the accounts open*

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