Keeping a credit card I don’t even use

When I left for college in 2003, my mom signed me up for my first credit card. Since I was going to school in San Diego, but my family was in Seattle, the thought was I could use this credit card if I ever needed to purchase an emergency plane ticket home. Fortunately, I never had to use the card.

Fast forward to last week. I get a letter in the mail from Chase. The letter informs me my account is going to be closed, citing a lack of activity over the last two years as the reason. At the very bottom of this two page letter there is a short blurb providing contact information to appeal the closure.

Normally I wouldn’t care. They can close my account. I don’t use the card, keeping the account open costs them money (albeit probably a negligible amount), and I don’t have any other accounts with Chase. But, even though I have no desire to ever use this credit card I really wanted them to keep the account open.

Why?

We want to buy a house. When we were pre-approved for a mortgage last month, we found out my credit score is 750, Girl Ninja’s 790. Since my credit score was slightly lower, banks would be using my score to determine what rate they would give us for a loan. Higher credit score’s get better rates. For reference, my 750 score is on the low side of “very good”. 

The Chase credit card I mentioned above is my oldest standing credit account. Did you know one of the determining factors in the credit score calculation is length of credit history? It makes sense, someone who has a ten-year track record of paying off debt on time, is probably more “safe” than someone who only has a six-month track record.

If my Chase account closed there is a very real possibility my credit score could drop to 730 or even 700.

This bumps me out of the “very good” credit standing and puts me in the “good” category. Theoretically a bank could decide to give us a slightly higher interest rate since we are no longer seen as “top-tier” loan applicants. Moral of the story, let an account close, pay thousands more in interest over the course of a mortgage. How lame is that?

If we weren’t currently in the house hunting process I’d be totally cool letting the account close. Aside from this pesky mortgage, I have no plans to borrow money, and therefore could care less about my credit score. Unfortunately, it is the standard and having a great score makes life significantly easier.

18 thoughts on “Keeping a credit card I don’t even use

  1. Funny, I had a gas card close up on me without warning just a few months ago. I heard a rumor that gas cards are one of the best cards to have to improve a credit score a long time ago. Oh well, it’s gone now.

    I inherited a credit card from my parents. Even though I had a terrible customer service incident regarding a charge that happened in another city with another name with a number that was one off to equal my number on a handwritten receipt…I’ve kept that card open because it has a funny “member since” on it, 1977. I was born in 1972 🙂

    My next oldest card that I use all the time has a member since 2007, blah…

    I used to have quite a few credit cards, but have since culled them down to a manageable 5 cards. I don’t like 2 of them because I opened them up to get “deals” in those 2 stores. I would like to open up a Discover card because I like the idea of having each of the big four, VISA, MasterCard, American Express, and Discover.

    I’m kind of surprised your score is so much lower than GN. Must be a big, old Nordstrom card that gave her a boost 🙂

  2. so are you going to use it for your next necessary transaction to keep it open?!

    When we bought our home my wife and I had similar scores. I attributed it to the fact that my name had all the other stuff on it and more recent items, internet credit check, gym credit check, recently switched banks (again another credit check)….just a theory.

    Have a great day ya’ll!

  3. I purposely have a recurring charge hit my oldest credit card each month (Hulu for $7.99). I don’t use it for anything else but that small monthly charge keeps it open. I’d recommend setting up something similar.

  4. I think it stays on your record for a number of years before it drops off. I would recommend reading more about that. Some accounts i remember staying around for nearly a decade.

  5. I put a monthly recurring charge on my Bank of America card just to keep it open since I’ve had it for 13 years. The length of your credit history only accounts for 15% of your credit score though compared to payment history at 35% and debt amounts at 30%.

  6. Your credit score would not drop that much because they closed an account based on the non-use. Scores change constantly every day, but that is a major hit.

    If you have any bill set to an auto-pay, set it to said Chase account that way you can keep it open. I set a couple of my bills (cable, gym, cell-phone, land-line) to Chase, which also happens to be my longest tenured credit card in the Dreemsie world, to auto pay that way I can keep it open. The rest I swap out every year for 0% cards.

    Also, while banks advertise the best rates if you are qualified, I wouldn’t take anything less than the best rate they have.

  7. It’s probably high time to put a charge or two on my first credit card I got in college. Besides being my oldest, it’s also the one I used to buy Joanna’s engagement ring on (I was waiting for a paycheck, so it acted as a payday loan, minus the interest rate and sliminess). That was also well before I knew or cared about what I was doing with my finances. So that thing has some sentimental value.

  8. I recently had a similar event, and yes, it could have a big impact because it affects 2 parts of the FICO score. Length of accounts, yes, that would pull your score down a bit. But you might get another hit because of the amount of debt outstanding relative to your entire available credit.

    I would definitely appeal. You need both your scores above 760 to qualify for the best rates. I just went through that last week.

    Have you run a FICO simulator? I would expect about a 30 point drop based on the info you’ve given. If you fail in your appeal, do you have a very recently opened account you can close? That might offset, but it could also hurt you if it has a large amount of available credit. Run a simulator, that will give you some good info.

    Let us know what happens!

  9. I have a credit card I use once a year to keep the account active. The card is my oldest and also has my second highest limit (so it helps me out in two ways). Also you should sort of care about your credit score because fair or not, insurance companies use it and since you are a Federal Employee they do run a credit check on you each time they do a background investigation, while a not-perfect score is fine, you might aswell continue not look like a “risk” to them.

  10. When we purchased our home my score was no where near Mrs.CBB as I was relatively new to Canada. I had only been building my credit score for a couple of years but we still got our mortgage. I know have credit cards that I had to get in order to build credit as stupid as that sounds that I no longer use. LIke you said though if I close them I risk my score getting lowered. Silly really. Cheers!

  11. I have been in the middle of this dilemma before. I acquired a credit card to use it for the beginning period that was free of interest and by the time that period was over I had a decision to make. I thought about not using it anymore and cutting it up. I consulted a friend and he explained to me about what you’re talking about. He made me understand that a long credit history is better than a freshly opened account. In results, I kept my card and continued using it periodically for all purchases like gas or groceries and will pay it off at the end of the month.

  12. Credit Karma lets you simulate the change in your credit score based on a lot of changes, like missing a payment, dropping a card, paying off a card, etc.

    If I were to close my oldest account (roughly 10 years old), Credit Karma estimates that my score would drop a whole 2 points. Of course, it’s probably somewhat different for everyone depending on your cards, history, current score, etc., but Credit Karma currently estimates me at a 750, which is within range of the score I had the last time it was pulled, so I’m probably in a pretty similar boat as you.

  13. I try to set up automatic payments of things like utilities, internet, or cable on my credit cards. I’ve never actually even realized that they would close my accounts for inactivity… Great tool over at Credit Karma by the way!

Comments are closed.