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Debt Management

Credit Counseling

Credit Basics

Ask the Biz Brain

Friday, December 24, 2004

I've had three credit cards canceled the past few months. Issuers of the cards don't tell you when a card is canceled, and you are embarrassed to find out when a store clerk tells you the card is invalid. Will this affect my credit score? -- Nervous

The Brain was wondering about this, so it went back to Nervous for more information. It seems two of your cards were lost or stolen in the mail, and a third was canceled when someone tried to ship merchandise to a location that differed from the billing address.

The cards were re-issued after you contacted the card companies. "If he had balances on the cards that were compromised, he needs to make sure they were transferred to the new accounts," said Howard Dvorkin, founder of Consolidated Credit Counseling Services in Fort Lauderdale, Fla. "If the old accounts say 'Closed by Creditor,' that could hurt the score."

Having three cards canceled can affect your credit rating depending on whether the card company reported the cancellations to one or all of the three main credit bureaus, Equifax, TransUnion and Experian.

"Because you have since had the cards re-issued, the current notation would reflect the account being open," said Diane Giarratano, director of education for Novadebt, a nonprofit credit counseling agency in Freehold. "However, any negative information reported by a lender could remain on your credit report for up to seven years, thus negatively affecting your credit score."

Consumers should check their credit report for accuracy once a year by requesting a free copy from the credit bureaus. If you are a victim of identity theft or credit card fraud, you should contact the credit bureaus immediately. All three have fraud lines established specifically to handle these issues.

-- Joseph R. Perone