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Closing or Transferring Card Accounts and Their Credit-Report History

This guide presents selected U.S. government consumer education from CFPB. References to “we” or “us” in the source material refer to the issuing agency. Source dates and links appear below.

Does it hurt my credit to close a credit card?

It depends on your situation. In some cases, closing a credit card may be a good financial step, but don’t assume it will improve your credit score.

Tip

Keep an eye on your statements. If you decide to keep an unused account open, be sure to watch your statements to protect against identity theft and to check for unexpected fees or charges.

Some people opt to keep a credit card account open, especially if it’s an old account and they have a positive payment history because this may help maintain a higher credit score. However, closing the account might be a good decision if:

  • The card has annual fees or poor terms that outweigh the benefits
  • It helps you avoid accumulating debt you can’t pay off
  • You aren’t planning to apply for credit in the near future

Otherwise, closing an existing credit card could also decrease your credit score, rather than help it. The change to your score may be temporary or minor but the full impact will vary based on other factors about your credit profile. Part of your score is based on the amount of credit you’re using, divided by the total amount you have available. This is known as your “credit utilization ratio”. Closing an existing card can increase your credit utilization ratio and lower your score.

I want to close my credit card account. What should I do?

In general, you should be able to close your account by calling the credit card company and following up with a written notice. If you still have a balance when you close your account, you are required to pay off any balance on schedule. The card company is allowed to charge interest on the amount you still owe.

Your cardholder agreement may give you any other details on how to close your account. You should be able to find a copy of the agreement on your card company’s website, and you can request a copy from your card company if it is not there. If you have any questions, you should contact your card company.

How do I remove an authorized user from my credit card account?

Tip

An authorized user is different from a joint account owner. If you want to remove a joint account owner, contact your card issuer to find out its policy for removing a joint account holder.

First, call customer service and ask that the authorized user be removed from your account. You can also ask the card issuer if you should get a new card with a new number. This may be a good idea if the authorized user has your card number.

After you have removed the authorized user from your account, let the authorized user know that they have been removed.

Can the credit card company sell my account?

Yes, most cardholder agreements allow the credit card company to sell your account to another card company. This can happen even when your card is active and in good standing. The new card company mails a new card to you, often with a new account number. You might not receive the new card for a number of months.

When your account is sold, the credit card company that buys your account becomes your new card company. Your new card company generally cannot increase the interest rate on any existing balance, except in certain circumstances. The new card company can increase the interest rate for new transactions, but it must give you 45 days’ notice. The new card company also can change other terms, but it must follow the same rules about giving notice that would apply if the account had not been sold and your old credit card company wanted to make the change.

Can my card issuer change my credit card from a MasterCard to a Visa - or from a gas card/department store card to a MasterCard?

Yes. While the law does not permit the mailing of unsolicited cards, the card issuer can substitute one credit card for another.

For example, your card issuer can send a substitute card when there is a change in the card issuer's name, the name of the card, or the features of the card. After the substitution, only one credit account can remain active for use.

How long does information stay on my credit report?

Credit reporting companies can generally report negative information about your credit account payment history for up to seven years, and may report positive information for longer.

Positive information:

This means that a positive (on-time paid as agreed) payment history on a credit card, mortgage, or other loan may show up on your credit report so long as you are paying your accounts on time, and may be reported after a loan is paid off, and even after the account is closed. A positive payment history also helps you build and maintain a strong credit score, which can lead to favorable terms for any future loans you might need. It’s common for credit reporting companies to use your length of credit history as a factor in determining your credit score, meaning the more experience and the longer the history you can show managing your credit well, the better.

Credit reporting companies are required to follow reasonable procedures to assure maximum possible accuracy of information contained in their consumer reports.

Tip

Don’t pay fees to “repair” your credit history.

Many companies promise to “repair” or “fix” your credit for an upfront fee. However, no one has the right to remove negative information, such as late payments, from a credit report if it is accurate. You can only get your credit report fixed if it contains errors, and you can do that on your own at no cost.

If you have a problem with credit reporting, you can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372).

Negative information:

A credit reporting company generally can report most negative information for seven years.

Information about a lawsuit or a judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. Bankruptcies can stay on your report for up to ten years.

Even though credit reporting companies usually won’t report this negative information after these limits they still may keep your information on file.

There are also certain instances where credit reporting companies may nevertheless report negative information outside these time limits. Time limits on reporting negative information do not apply if the credit report will be used in connection with:

  • Your application for a job that pays more than $75,000 a year
  • Your application for more than $150,000 worth of credit or life insurance

How long does a bankruptcy appear on credit reports?

If you filed for bankruptcy protection, that information will remain in your credit report up to 10 years from the date of entry of the order or the date of adjudication.

Your bankruptcy will stay on your credit report up to 10 years if it’s filed under one of the following chapters of the Bankruptcy Code:

  • Chapter 7
  • Chapter 11
  • Chapter 12
  • Chapter 13

In certain instances, bankruptcy can be reported beyond 10 years.

Sources and publication details

The federal agency source text is U.S. government work in the public domain. Fynoptic selected, adapted, and formatted it for this guide. No agency endorsement is implied. Follow the linked sources for current program details and the rules applicable to your circumstances.

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