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Credit Score Experts - Closed Account

Posted on 2/3/16 at 6:14 pm
Posted by LSUFanHouston
NOLA
Member since Jul 2009
37106 posts
Posted on 2/3/16 at 6:14 pm
Last year wife decided she wanted a new entertainment center. We went to several furniture stores and the one she liked best came from Rooms To Go. It was roughly $1,500 - it was a closeout model. So we got a great deal. As the salesman is ringing up the purchase, he mentions that they had a 36 month no interest payment promotion on their RTG credit card. We said what the heck, no interest is always a good deal, and they ran credit and approved my wife for something like $12,000 credit line. We completed the deal. We have not used the account since. Every month, I pay 1/35th of the original balance due. This is paid via automatic payment.

Yesterday she gets a letter in the mail from TD Retail Services, the credit card company behind the account. Apparently, TD and RTG are "ending their relationship" and the upshot is that on February 28th (I think that is the date, letter is not in front of me) all RTG accounts serviced by TD Retail, including ours, will be closed. We are free to use the card to charge purchases until that date, and the letter specifically says there will be no change in servicing on our account. We will continue to pay TD Retail every month, and they will continue to honor all promotions such as our interest-free one.

Here's my question: What effect will them closing the account have on my wife's credit score? Her credit score is in the 730s. The current utilization on this account looks very good. I am concerned that a "closed by credit grantor" note on her trade line, along with the card limit I'm guessing going to zero, might impact her credit score.

The only reason this is really an issue for me, is that she is looking to replace her car sometime before the end of the year. We are probably going to start looking late summer.

Thanks for advice!
Posted by VABuckeye
Naples, FL
Member since Dec 2007
35557 posts
Posted on 2/3/16 at 8:21 pm to
Little to no effect unless you literally have no other trade lines.
Posted by LSUAfro
Baton Rouge
Member since Aug 2005
12775 posts
Posted on 2/3/16 at 8:24 pm to
What buckeye said. If she has an established credit history it should have little to no effect.

You migh even want to consider opening a new line. The initial ding will be counter balanced by the increased available credit.
This post was edited on 2/3/16 at 8:26 pm
Posted by LSUFanHouston
NOLA
Member since Jul 2009
37106 posts
Posted on 2/3/16 at 9:02 pm to
quote:

Little to no effect unless you literally have no other trade lines.


Thanks. The mortgage is listed since it's joint, she has a visa card and a couple of store cards. That's what is currently open.
Posted by LSUAfro
Baton Rouge
Member since Aug 2005
12775 posts
Posted on 2/3/16 at 9:14 pm to
Get her a new card with a good sign up. Don't even have to use it after initial spend. She should have more revolving credit. A Chase freedom no annual fee card sounds like it might work for you.

This post was edited on 2/3/16 at 9:16 pm
Posted by LSUFanHouston
NOLA
Member since Jul 2009
37106 posts
Posted on 2/3/16 at 9:34 pm to
quote:

A Chase freedom no annual fee card sounds like it might work for you.



I will look into it. Thank you. We don't use a ton of debt. Both of us made some poor financial decisions in college and it took us years to dig out. Now that we are, we tend to use credit only for things like this, where there is zero interest, or big things like mortgage or a car. We each have a regular credit card to use for things like online purchases, renting cars and hotels, etc. But we've never cared much for the points thing. Maybe we are missing out on something but something to be said for peace of mind.
Posted by LSUAfro
Baton Rouge
Member since Aug 2005
12775 posts
Posted on 2/4/16 at 9:10 am to
quote:

But we've never cared much for the points thing. Maybe we are missing out on something but something to be said for peace of mind.

Understandable.
730 is a fine score and will probably satisfy most creditors for their best rates, but if it were me or my wife, I'd open a couple of revolving credit lines to bump that to 750+ just to ensure the best rates possible.
Posted by VABuckeye
Naples, FL
Member since Dec 2007
35557 posts
Posted on 2/4/16 at 9:45 am to
The benefit of something like the Freedom over a store card is a) a better interest rate b) zero percent offers that don't just apply to a store and c) a VISA or Mastercard obviously gives you more ability to use it AND you get Ultimate Rewards points which combined with a Chase Sapphire Preferred card opens up a nice avenue to transfer points and get some free travel here and there.

For instance the Freedom offers rotating 5% bonus categories every quarter and two of the bonuses are for gas station use. $1500 spent in a quarter equals 7500 Ultimate Rewards points which transferred to United Airlines via the Chase Sapphire Preferred equals 7500 miles. All on something you're going to spend money on anyway.
This post was edited on 2/4/16 at 9:48 am
Posted by LSUFanHouston
NOLA
Member since Jul 2009
37106 posts
Posted on 2/4/16 at 10:02 am to
quote:

The benefit of something like the Freedom over a store card is a) a better interest rate b) zero percent offers that don't just apply to a store and c) a VISA or Mastercard obviously gives you more ability to use it AND you get Ultimate Rewards points which combined with a Chase Sapphire Preferred card opens up a nice avenue to transfer points and get some free travel here and there.


Thanks. We will look into it. The only reason she has those store cards are because of the discounts. I used to go online about 3 days after purchase and pay it. However, I read that it's actually good for your credit score to report a balance every month and pay it in full every month, as opposed to after every transaction. So that's what we do now.
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