Closing a recently opened account.

[Stu.Padaso]

I'm considering closing the HBC credit card I opened back in late December. I've used it twice and paid each purchase off a day or two after it hit my account.

 

I remember saying that I felt stupid getting this card because I honestly don't need it. At the time I thought it would be a nice store card to look good on my credit report, but it's just one more thing for me to keep track of. There are no benefits, no rebates, no discounts, nothing other than the 1-time discount I got at the register when I applied. Worst of all I can't find a spot for it in my wallet! I think I'd much rather use a Visa/MC when I shop at Zellers and at least get some airmiles or a rebate out of my purchases.

 

I'd rather close it and forget about this card as opposed to just filing it away somewhere and having it cancelled years from now due to lack of use. Being the OCD-type person I am, I know I'd still end up routinely checking up on it to ensure it hasn't been compromised or something.

 

I realize the hard inq hurt a bit and there is nothing I can do about that. As well, I assume it lowered my average age of accounts when it started reporting to TU and EQ.

 

So what will closing a 6 week old account do to my reports? Does it reverse the effect it had on my average age of account? Or is all this stuck there?

 

(p.s. I'm 99% sure I'm going to close it. I just want to know what kind of effect, good or bad, it will have on my credit report.)

[IneedzFunds]

Not 100% if it works the same way in Canada (I am assuming that it does though), but if you do not have any late payments/penalties against this card, this card is not a secured card or you are not paying an annual fee, it is in your best interest to not close it (especially at this time when business organizations across the board are tightening their credit and lending policies). Depending on how long and how many credit products are on your credit profile, cancelling a credit card can actually hurt your credit score. For example (and not a rule of thumb - but close), if you have a credit profile that is three years old (i.e. - you first started getting CCs 3 years ago) and it has only four or five credit products listed on the credit profile (i.e. - only 4 CCs listed on your credit report), then cancelling the card may decrease your credit score. If you have a longer history and larger amount of credit lines on your profile, it probably will not affect it as much.

 

Rule of thumb with today's credit, if you do not need to cancel the credit card, don't do it (my opinion only). If you don't want to use it, make sure there are no fees associated with it, pay it off (if there still is a balance) and simply cut it up (or file away) the credit card (in otherwords, don't use it). Likely worst case scenario is not that the company will cancel your card, but they will try to entice you to use it more in the future.

Edited February 7, 2010 by IneedzFunds

[Quasei2]

This really probably won't have much effect either way, Stu. You've got a couple of accts of similar age so I suspect this one will be fairly inconsequential in terms of scoring. Besides, score isn't everything... big picture is far more important.