Trying to use your credit card only to find that it is no longer active can be frustrating and upsetting. Though it may seem illegal, companies can cancel your credit accounts without warning. As such, if this represents your circumstances, understanding the most common reasons this can occur is critical. The following blog also explores the impact that having a credit card suddenly canceled can have on your credit score and the importance of connecting with an Arroyo Grande consumer lawyer who can help you explore your legal options during these matters.
Why Might a Credit Card Be Canceled Without Warning?
It’s important to understand that there are several reasons your card may be canceled. Additionally, the credit card issuer does not have to provide you with notice that the card has been or will be canceled. While some companies will provide a warning, many do not, so understanding the common reasons accounts are closed can help you if this has happened to you.
One of the most common reasons that a card company would close a card without warning is due to inactivity. If you do not use the card for an extended period of time, it can be canceled by the issuer. There is no consistent time in which the card is inactive before closure, as it will vary from card company to card company.
It’s also important to understand that if your credit score drops significantly, it can also lead to your card company closing your account. Credit card companies often run credit checks on customers, and if your credit score falls below their minimum, it can result in your account being closed.
What Impact Will This Have on My Credit Score?
If your credit card account is suddenly closed, you’ll find that it can have a considerable impact on your credit score. In general, one of the most significant causes is the change in your credit utilization. Generally, keeping your utilization, meaning the amount of available credit you have used, low is ideal as it shows you can manage your debts. However, when one card is closed, it reduces your credit line, making your utilization appear higher than it actually is.
You should also note that if your closed account is old, it can reduce your credit score as the age of your credit is another important factor. If the account closed was long-standing, it will reduce the average age of your credit history. Additionally, if you open a new account, the average age will fall even further, reducing your credit score as a result.
Unfortunately, you’ll find that having your account suddenly closed can have serious impacts. As such, it’s imperative to understand your legal options. In some instances, the closure of your account and the aftermath could be violations of the Fair Credit Reporting Act or the Truth in Lending Act. As such, if you have had your account suddenly closed, it’s in your best interest to discuss your legal options with an experienced attorney. At Loker Law, APC, we understand how difficult these matters can be. That is why our firm is committed to fighting for you. Contact us today to learn how we can assist you.
