Dear Liz: My wife and I have excellent credit, pay our credit cards in full each month before the due date, and have no outstanding loans or debts. Our credit utilization is low, about 3-4%. Our total available credit is about $125,000 for six cards.
One credit company keeps reducing our credit line every time they think we aren’t using their card enough. They want us to “spend more,” but haven’t defined how much to spend per month. It’s becoming stressful having to contact this company every time to get our credit line restored to the full amount and our credit scores back up by about 10 points.
If we close this account, which is not our oldest card, do we risk our score dropping significantly and permanently? Would we be better off settling for a lower credit limit? If we do either, would it trigger alerts to other cards we use to do the same? The other cards have better benefits so we use those more.
Answer: There is nothing permanent about credit scores. They change constantly, and the minor damage you do by closing a card can be swiftly repaired as long as you have other cards that you use consistently and responsibly.
If there are months where you don’t use the card at all, you could consider adding a small recurring charge or two so the account shows some activity. You could also ask for a “product change” to a card with better benefits that you’re likely to use more often.
Or you could just figure that this company isn’t interested enough in your business to be worth the bother. When you call to cancel the account, make sure to tell them exactly why.
A dramatic drop in your credit scores could cause other issuers to review your accounts, but your scores are too good, and the impact of one closure is too slight for you to worry about that.
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