Losing Your Credit Card Won’t Damage Your Credit Scores
You’ve heard that one of the factors considered in calculating your credit scores is the length of time you’ve had an account – be it a credit card, mortgage, car loan, or retail account. You’ve also heard that closing one credit card account and opening another can pull your scores down.
So what if you lose your card and have to get a new account number to prevent unauthorized use? Or what if you’ve been a victim of one of the recent security breach incidents?
Breathe easy – those reasons for closing a credit card account and opening a new one won’t hurt your credit scores.
In fact, it won’t even be treated as a new account. Instead, your credit card issuer will transfer all of your information from the old account to the new one, which will be opened simultaneously. The new account will carry the same opening date, interest rate, credit limit, and payment history.
When your credit card issuer reports the change to the credit bureaus they may or may not show a closed account and a new account. Instead they may simply report a change in account numbers.
Closing an account to change to a different kind of account can lower your scores.
You may want a credit line increase, or you may want to switch from a standard card to a rewards credit card. Or, you may feel it’s time to switch from a student credit card to a standard card or rewards card. These actions could lower your scores.
Instead of closing the account that has “history,” consider keeping it and making application for a second card. This could be an especially good move if you want a rewards credit card to use for a purpose that will accompany payment in full each month – for instance, to charge gasoline for which you’ll be reimbursed by your employer.
By keeping your rewards credit card charges separate from a card that carries a balance, and paying it in full each month, you’ll avoid paying any interest on those charges.
You should also hang on to your student credit card for the time being. Keep it and use it occasionally to keep the account open until you’ve built a history with your new card. Even if that student credit card carried high interest, you won’t be paying it if you charge small amounts and pay the balance in full each month.
