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Ask your advocate.

My credit card was cancelled because I haven't used it for about two years. Will this lower my credit score?

--S. Williams

High Point, NC

This most likely happened because credit card companies lose money when accounts go unused. Considering the current economic climate, many companies are looking to save cash wherever they can. If the account that was closed was the oldest one on your credit report, your score will drop. This is because the length of your credit history accounts for 15% of your FICO score. In addition, you total available credit is reduced when an account is closed, thereby increasing your credit utilization ratio. This refers to the percentage of credit that you have used. A high ratio often results in a lower score. Your best bet is to call the company and request that your account is reopened.

If you have a limited credit history and only a few cards, you should make sure that your older accounts remain active. You can do this by making a small purchase at least every four months and then paying the balance in full so that you can avoid accumulating hefty interest fees.

On the other hand, if your card is new compared to others on your credit report, there's no need for you to worry.

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Article Details
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Title Annotation:QA; credit score
Author:McRae, Sheiresa
Publication:Black Enterprise
Article Type:Brief article
Geographic Code:1USA
Date:Mar 1, 2009
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