Last week I received a great question from a Minter about correcting an error on a credit report. Her scenario had so much meat on the bone that it warranted a blog post.
Normally when people complain about credit report errors they’re focusing on derogatory information.
However, this question has nothing to do with negative information.
“A couple years ago I paid off one of my credit cards and canceled that card. I assumed this would eventually show up on my credit report as “Closed” the way my other cards had. However, when recently investigating my credit report, I saw that it’s still showing up as “Active” on all three of my credit reports…and I have no idea what to do!
I tried to contact the issuing company (Citibank) and they couldn’t find a record of my card because it’s been so long and I don’t have the account number anymore.
How do I proceed? Do I have to take it up with each credit report agency separately? Is there a standard process for disputing this? I definitely want it showing up as Closed because my current credit score is being negatively affected because I have too much available credit.”
The Credit Dispute Process
If the account is, in fact, closed then it needs to show up as being closed on her credit reports.
And, because it hasn’t already been updated to show as being closed she’s going to have to go through the credit report dispute process to have it updated.
If the credit card issuer still had a record of the account readily available in their systems she would NOT have to go to all three of credit bureaus directly because she can file her dispute directly with her credit card issuer, which then has to correct ALL of the credit reports.
However, it appears that the issuer has not record of the account any longer so she’ll have to go to each of the credit bureaus (assuming it’s showing up incorrectly at all three) and file disputes directly with them.
She can do this online (for free) via the credit bureau’s websites, which you can find at:
The Plot Thickens
Here’s a little twist to her scenario…
If the creditor cannot find a record of the account then when the credit bureaus ask them to investigate it (via her dispute) then the credit bureaus will have to remove it from her credit reports.
The credit bureaus are not allowed to maintain information that is not verifiable.
Now, to the issue of her credit scores being punished because of having “too much available credit.”
The two credit scores that matter (FICO, VantageScore) actually reward you for having a large amount of unused credit card credit limits because it helps you maintain a lower debt-to-credit limit ratio, which I’ve written about here, and here, and here, and here.
In fact, if you look at the factors that influence the FICO and VantageScore credit scores, “Too much available credit” isn’t on the list.
So, I’m not sure what score type/brand you’re looking at but I wouldn’t get overly concerned about having too much available credit.
It’s not the potential for getting into debt that matters…it’s whether or not you’re actually in debt and how you manage the debt that matters.
The Real Concern
What you should be concerned about is your scores going down after the account is A) updated to show closed or B) removed from your credit reports.
If the account had a decent sized credit limit AND you’re carrying balances on other credit cards then your scores could go down because your debt to limit ratio will go up when it shows as being closed or is removed.
And, if the account is removed from your credit reports AND it was an old account you’ll lose the value of the age of the card in your credit scores.
The Bottom Line
You’re right to want to have a 100% accurate credit report, and you deserve one. But, closing a credit card is one of the impactful actions you can take relative to your credit scores.
So, if your scores are already good…I’d think about letting sleeping dogs lie.
John Ulzheimer is the Credit Expert at CreditSesame.com, and a credit blogger at SmartCredit.com, Mint.com, and the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. You can follow John on Twitter here.