Who Can See And Use Your Credit Report
Those allowed to see your credit report include:
- banks, credit unions and other financial institutions
- offer you a promotion
- offer you a credit increase
A lender or other organization may ask to check your credit or pull your report”. When they do so, they are asking to access your credit report at the credit bureau. This results in an inquiry in your credit report.
Lenders may be concerned if there are too many credit checks, or inquiries in your credit report.
It can seem like you’re:
- urgently seeking credit
- trying to live beyond your means
The Card Has A High Annual Fee
If your card has an expensive annual fee and you don’t use the rewards, it may be worth closing the card. Before you do, remember that you may lose the rewards you currently are eligible for. As an alternative, find out if the card issuer can transfer your account to a different card that doesn’t carry a fee. This lets you keep the account open while avoiding the annual fee.
Who Creates Your Credit Report And Credit Score
There are two main credit bureaus in Canada:
These are private companies that collect, store and share information about how you use credit.
Equifax and TransUnion only collect information from creditors about your financial experiences in Canada.
Some financial institutions may be willing to recognize a credit history outside Canada if you ask them. This may involve extra steps. For example, you may request a copy of your credit report in the other country and meet with your local branch officer.
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What Factors Determine My Credit Scores
A number of credit-influencing factors are commonly used in calculating your credit scores. These include your credit card utilization, percentage of on-time payments and the average age of open credit lines.
The charts below show what factors make up two popular credit score models, the FICO® Score 8 credit score and VantageScore 3.0® credit score models. Youll notice that credit card usage, or utilization, is important to both, but not the only factor.
Will My Credit Score Go Down If My Account Is Closed For Non
Theres a good chance your credit score will go down if your account is closed due to inactivity, especially if the card closed is one of your older credit cards or you carry balances on your credit cards.
A closed credit account can impact three of the five categories that determine your credit score including amounts owed, length of credit history, and credit mix.
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Good Credit Puts Money In Your Pocket
Good credit management leads to higher credit scores, which in turn lowers your cost to borrow. Living within your means, using debt wisely and paying all billsincluding credit card minimum paymentson time, every time are smart financial moves. They help improve your credit score, reduce the amount you pay for the money you borrow and put more money in your pocket to save and invest.
1 Scores and rates as of January 9, 2015, as reported on myFICO website.
Consent And Credit Checks
In general, you need to give permission, or your consent, for a business or individual to use your credit report.
In the following provinces a business or individual only needs to tell you that they are checking your credit report:
- Prince Edward Island
Other provinces require written consent to check your credit report. When you sign an application for credit, you allow the lender to access your credit report. Your consent generally lets the lender use your credit report when you first apply for credit. They can also access your credit at any time afterward while your account is open.
In many cases, your consent also lets the lender share information about you with the credit bureaus. This is only the case if the lender approves your application.
Some provincial laws allow government representatives to see parts of your credit report without your consent. This includes judges and police.
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Should I Cancel My Credit Card Instead
Unfortunately, you cant cancel your credit card application and canceling your credit card account wont erase the hard credit pull performed on your account. But you can close your account without incurring further credit score hits without any problem.
However, one perk of keeping the account open is the increased credit limit it offers. Even if you never use the account, its very presence can help improve your credit utilization and increase your average account age, giving your credit score a boost.
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Choosing To Keep Your Card Open
Just as there are reasons to consider closing your credit card, there are also good reasons you may decide to keep it open:
- Helping manage your credit utilization: If the card youâre thinking about closing has available credit, keeping it open could help keep your credit utilization ratio lower.
- Keeping your credit file robust: If your credit card is one of only a few sources of credit, closing the account could give you a thin credit file. This means you may not have enough credit history to be scored. In this case, you may want to keep your card open to continue building your credit.
- Maintaining a mix of credit types: Your credit score can also benefit from having more than one credit type. This can include things like revolving credit, personal loans or mortgages. If your credit card is your only form of revolving credit, you may want to keep it open to diversify your active credit.
- Preparing to make a big purchase: If youâre planning to purchase something like a house or a car, it helps for your credit to be at its best. Especially when it comes to applying for a loan. In this situation, it could be in your best interest to keep your credit card open for the time being.
Can Too Many Credit Cards Hurt Your Credit Score
Richard has more than 30 years of experience in the financial services industry as an advisor, a managing director, directors of training and marketing, and currently as a consultant to the industry. Richard has written extensively on a broad range of wealth management, investment, and personal finance topics that have appeared on sites such as Kiplinger, Best Company, Newsmax, and Yahoo Finance. He is an expert on Finra Exams and Retirement Planning.
are great financial tools of convenience and security. They come in handy when you either don’t have any cash on hand or don’t want to carry cash when making purchases. They can also be quite useful when making large purchases such as a new TV or major appliance. They’re especially convenient when you’re traveling and can provide you with a number of travel-related protections such as zero liability fraud coverage, lost or stolen card replacement, and auto rental insurancenot to mention opportunities to earn rewards.
But can you have too many credit cards? Popular financial wisdom says having too much plastic under your name can hurt your . This immediately begs the question: How many credit cards are “too many”?
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If You Have Credit Cards But Just Never Use Them
Simply having an open credit card account that is in good standing leads to a monthly infusion of positive information into your major credit reports, as it indicates that you have credit available and that youre being responsible with it. The benefits wont be as pronounced as they would be if you were routinely using your credit cards to make purchases and then paying them off by your due date, but simply having a credit card will nevertheless help you build credit.
When It Makes Sense To Keep An Unused Credit Card
Particularly if you’re planning to apply for new credit soonin the form of a mortgage or an auto loan, for instancekeeping unused credit cards open can help protect a good credit score.
Check your to identify your oldest credit card account and plan, in most cases, to keep it open. That’s also a smart idea when the card you’re considering closing has a high credit limit and cancelling it would greatly reduce your amount of available credit.
If you’re concerned about the temptation to spend, place the card in a space that’s hard to access, such as a safe deposit box, and only make one card available for emergencies. You may want to consider using cash for most purchases but placing a single recurring charge on your credit card, such as your Netflix payment, and paying it off each month by automatic debit. That will help keep your credit utilization low, your payment history spotless and your credit score in good shape.
If you’re truly unable to control your spending and closing the account seems like the only way to appropriately manage your finances, doing so could be worth the short-term credit impact. An unused card with a high annual fee that you can’t afford is also generally safe to close, as is a newly opened account that you don’t use. Cancelling it will have less of a negative impact on your credit score than closing an older account.
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What To Do With Old Credit Cards What Every Cardholder Should Know
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If you have an old credit card account that you no longer use, you should consider whether you want to keep or cancel it. An unused credit card with an annual fee should be canceled in most cases. But cards with no annual fee likely won’t negatively impact your finances, so they’re fine to keep aroundif your bank doesnt cancel them due to prolonged inactivity. In this article, well show you what to do with inactive credit card accounts and discuss alternatives to closing them. Additionally, well discuss why closing credit card accounts can be bad for your credit score.
Why A Credit Card Issuer Would Want To Close Your Unused Credit Card
So why would a credit card issuer suddenly close your account?
You might think theyd rather keep it open in the event that you might use it and rack up interest charges. However, if enough time goes by without activity, the issuer actually loses money on your dormant account.
Most credit card issuers do not charge an inactivity or dormant account fee on unused credit cards. Typically, inactivity fees are only assessed on deposit accounts, like checking accounts or savings accounts.
How long can a card go unused before being closed?
Theres no set time for all credit cards, but typically a year or more is about the maximum your unused card might stay open.
And, for some good news, youre not allowed to be charged inactivity fees on unused accounts.
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Is It Bad To Max Out Your Credit Card
Maxing out a credit card can have serious financial consequences, especially if its your only card. Thats because youll have a 100% credit utilization ratio for that card, which will likely hurt your credit score and make you look risky to lenders. Lower credit scores can lead to higher interest rates on future borrowing, such as car loans and mortgages, which means more money out of your pocket, says Miranda.
Getting Married Will Merge My Credit Score With My Spouse
False. When you get married, your credit report stays unique to you and only you. “Credit reports are always individual at the consumer level,” Ulzheimer says.
When it comes to applying for new credit with your partner, such as filling out a joint application for a mortgage, each partner’s credit score is taken into consideration by the lenders. Once a joint loan is opened, the positive and negative actions both you and your spouse take are reflected on both of your reports.
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Can A Credit Card Be Closed Due To Inactivity
The short answer here is yes. And, as you know, closing an account can have an adverse effect on your credit score. Before you run out to charge something just to keep your account active, you should know that it usually takes a year or more of inactivity for the issuer to close the card. But you should also know that you might not get any warning that it is going to happen. Credit card companies are not required to notify customers of account closures if they are being closed due to inactivity.
If you do find that an account has been closed and you want to reopen it, you will need to contact the issuer. They may be able to reinstate the account if you contact them soon enough. Issuers have different policies, so it is not a given that you will be able to do so. But it wont hurt to ask.
I have a favorite card that goes way back to when I was just starting a business but that I havent used in a long time. Its just sentiment, but when it was about to be closed I asked for it to stay open and the issuer was happy to keep me on. This is understandable since they pay big money to acquire and keep a customer and I was offering to stay for free.
Paying Off Debt Increases Your Credit Score
True and false. This is true for , but not so true for installment debt, such as a mortgage or student loan. While it is good for your overall financial life to be totally debt free, you won’t see a bump in your credit score if you pay off your car loan, for example. It can actually ding your score because it means having fewer credit accounts. That doesn’t mean you shouldn’t pay off the loan, though you don’t want to pay unnecessary interest over time just to save a few credit score points.
Because credit cards usually have higher interest rates than installment loans, paying off credit card debt first can help you while also improving your score .
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Opening New Credit Cards All The Time
Tempted by the enormous signup bonuses you can earn on rewards and travel credit cards? Theres nothing wrong with using credit to pursue rewards, but you may wind up with too much of a new thing.
New credit makes up another 10% of your credit score, mostly because each new credit application you make causes a hard inquiry on your credit report. Too much new credit can cause your score to temporarily drop, which could make it more difficult to qualify for loans with the best rates and terms in the future.
Forgetting To Pay Your Bills On Time
If you think paying your credit card bill late every once in a while isnt a big deal, youre definitely wrong. Believe it or not, but your payment history is the most important factor that makes up your FICO score, making an impact of 35%. This means a single late payment could cause serious damage to your score, but it also means multiple late payments could harm it even more.
The best thing you can do for your credit is always pay your bills early or at least on time every single month. If you dont take bills seriously and you simply pay them when you get around to it, youll likely regret it.
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