If Your Credit Card Issuer Closed Your Account, Here’s Your Next Step

It’s possible to reopen a closed credit card, but success depends on the details. For instance, did you close the account and now regret it?

Or worse, were you caught off guard when the credit card issuer closed your account?

The steps you need to take to reopen your closed credit card depend on why – and who – closed it. I’m going to help you through this process. There are no guarantees when it comes to credit, but you’ll know you made a valiant effort.

People close their credit cards for a variety of reasons, such as no longer wanting to pay a high annual fee or deciding that they no longer benefit from the rewards program.

If the account was in good standing when you closed it, call the issuer and ask to have it reopened. At this point, the next steps depend on the specific issuer. Some issuers might make it easy for you by reinstating your old credit card account with the same account number.

But others might require you to apply for a new card. Both of these possibilities usually require a hard inquiry on your credit report. This can ding your score a little bit, but it falls off your report in two years.

If your credit card issuer closed your account, the first step is to find out why. It usually involves one of the following reasons:

If the culprit is inactivity, that’s easier to fix than a delinquent account or a shopping binge that created high balances and a lower credit score. When you call your issuer, be sure you can address the cause of the cancellation.

If you are truly entering a financial crisis, talk to the issuer about getting into a hardship program. Put away your credit cards until you are back to being debt-free.

Your credit utilization ratio should always be less than 30%, but keeping it less than 10% boosts your score the most.

Here’s an example: Let’s say you have two credit cards, Card A and Card B. They each have a $1,000 credit limit. In this case, your available credit is $2,000.

Now, let’s say you have a $400 balance on Card A and a zero balance on Card B. The amount of credit you’ve used is $400. Your ratio is 20% (400/2,000), which is good.

You decide to close Card B, and now you lose that available credit. Your ratio is now 40% (400/1,000), which is highly likely to make your credit score drop.

See how that works? If you must close a credit card, apply for a new card first. This way, you’re replacing the “lost” available credit.

When a card issuer closes your card for you, it can have this same effect on your score. If that does happen to you, get to the bottom of it as soon as you can to limit the damage.