Chase Closed My Accounts, What Does That Mean For My Credit Score?

Closing your credit cards is usually something to avoid — especially if you know that you are going to be taking out a large loan soon, such as a car loan. That’s because when you close your cards, this does damage to your credit score.

Unfortunately, sometimes you don’t have a choice about whether your accounts are closed or not — the creditor may close them for you. This is what happened to a Reddit user recently, and the poster ended up very concerned about what the involuntary closure of his accounts potentially meant for his credit and his ability to get a good rate on a car loan. 

A Reddit user runs into big problems with his credit card accounts

The original poster (OP) in the Reddit thread explained that he was in a tough situation.  He said that he woke up to discover his bank would be shutting down all of the accounts he had with them. This included his only credit card, which had been open for 13 months.

While he was not 100% sure why the bank had decided to target him like this, he suspected that it was because he was periodically sending money back to his family in his home country of Nigeria, and he thought this prompted the bank to believe he was engaging in fraudulent activity. 

Regardless of whether that’s the case with the bank or not, the reality is that the lender told him the account closure is final, and there’s nothing that can be done. The fact also remains that the Redditor is going to be applying for a car loan in a very short time period, within under a month of the time when the bank initiated the involuntary closure of his accounts.

Even if he was able to pursue some kind of appeal process to try to get the bank not to close his cards, the process of doing that would likely take too long, as the OP would have already got his car loan before the appeal had time to go through. So, the Reddit user is just left hoping that the decision of his creditors won’t do serious damage to his credit score and leave him saddled with a loan at a very unfavorable rate. 

Closing an account will hurt your credit, but you have options

There’s no doubt that the closure of his accounts is going to hurt the Redditor’s score. When accounts are closed, you lose the positive payment history as well as the line of credit available. Payment history is the number one most important item in the credit scoring formula, while average age of credit and credit utilization are all very important as well. Closing an account shortens the average age of credit, and the loss of the credit line hurts the credit utilization ratio since that number compares credit used versus credit available. 

So, the Redditor is definitely not in a great position here. However, since he’s getting his car loan soon, it’s possible that the car loan lender might pull his credit before the account closure is reported to the credit bureau. This would be an ideal situation since the Redditor could get the big loan and then deal with fixing the damage to his credit over time. In fact, if he can, he should push up the time to get the car loan and do it ASAP while his accounts still show on his credit record.

The Redditor can also do other things to try to limit the damage. Paying down debt on other accounts will help him to avoid a hit to his utilization ratio, for example.  If he has a close friend or family member with a card that has been open for a long time, he could also see if it’s possible to get added to that account as an authorized user. That account would show up on his record, making his credit history look longer and giving him credit for the favorable payment history. 

Ultimately, over time, the Redditor is going to want to make sure he has a credit card that he keeps the balance low on, pays every month, and leaves open for a long time — so that may mean applying for a new one and, if necessary getting a secured card if he can’t qualify for an unsecured one based on his score after the account closure.

But, for now, he should focus on getting the car loan ASAP if his score hasn’t taken a hit yet. The car loan will also help his credit by giving up a different kind of debt on his record, so that loan could also help limit the damage, too, so it’s definitely worth trying to move forward with it now if he can.