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Credit card account cancellation
Canceling your credit card should be done the right way
Every now and again you may find yourself needing to cancel an account with a credit card company. If you do, make sure you do it right and follow up to make sure it has actually been done. If not done correctly, it could hurt your credit report.
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Credit card cancellation could hurt your credit report
The process of acquiring credit is a long and tedious one, and we spend most of our time on this site helping people get credit. But sometimes it becomes necessary to get rid of credit, too. You may find that your credit card company has changed ownership and along with it, the terms of agreement. Perhaps you find the terms to not be to your liking. Perhaps your interest rate has been arbitrarily raised to some high figure, such as 30%. Or perhaps they company has done away with the grace period between the time you make the purchase and the time that interest starts to accrue. Whatever the reason, sometimes it is necessary to cancel an account. If you do, make sure that you do it the right way.
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Here are some things that will help you when it comes time to cancel an account:
- People sometimes want to close an account before they apply for a home loan so that it doesn’t appear that they have too much available credit. Do this several months before you plan to apply for the mortgage, and close the account that you have had for the shortest period of time. Older accounts add value to your “credit history”, so you want to keep those even if you have no balance. Canceling an older account, rather than a newer one, could lower your credit score.
- It is perfectly acceptable to cancel over the phone by calling the number on the back of the card. If you do, be sure to get the name of the person with whom you spoke and to make a note of the date and time when you called.
- Follow up this phone conversation with a letter to the credit card company, reiterating that you are canceling your account. You want to make sure that they have received the information. It would not hurt to send this letter by Certified Mail.
- Wait a month or two and then obtain a copy of your credit report. Check to see if the report makes note of the fact that the account has been closed. Also check to make sure that it says that the account was closed at your request, and not at the request of the company, which could lower your credit score.
- Should there be an error on the report, contact the company that issued the card. They can help to correct the error.
- Sometimes, if you call to cancel an account because you no longer like the terms of the agreement, you may find that the company is a bit flexible. No company wants to lose a long time customer, and if you tell them that you are canceling because of the interest rate, they may offer to lower it. At that point, it is up to you to decide if you wish to keep doing business with them.
When you cancel an account, you want to make sure that it is done in a way that will not hurt you later by lowering your credit score. It’s not hard to do, but you need to take the time to make sure that you do it properly.
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