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On purging unused accounts from credit reports

March 14, 2014
Ask Erica
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QHi Erica,

How can I get unused accounts removed from credit reports? –David

ADear David,

To quote Shakespeare, “What's done cannot be undone.” “Macbeth,” of course. A little dramatic for your question, but apropos.

You see, by completing an application for credit, you initiated several events:

      1. An inquiry showed up on your credit reports. Upon receipt of your application, the creditor reviewed your credit file to determine if you qualified for the product. This inquiry is called a hard pull.
      2. An account was opened. The bank — I presume a credit card issuer — decided you were right for its product, so it accepted your application and gave you the line of credit. The card is now open for business, even if you never called the number on the back allowing you to start charging.
      3. The account was listed on your credit reports. When the bank made you an official cardholder, it reported your account to the credit bureaus, which added the account to your credit file. Because you haven't used the card, however, it shows limited information, such as the date it was opened and the amount you're allowed to charge.
      4. Credit scoring data were generated. Your credit scores (such as the FICO) were impacted when information on your credit report was inputted into a mathematical model. As long as the activity for this account is being reported, your scores are affected.

So can you rewrite accurate and timely history by having this information purged? No, says Julie Springer, vice president of credit reporting bureau TransUnion. But it may not be problematic, so try not to worry about it now.Ask Erica

In fact, look on the bright side: “For example, his credit utilization [the ratio of credit used to credit available] is lower because of this account,” Springer says. So, it can work to your favor if you're carrying debt, because for scoring purposes, it's ideal to owe less than 30 percent of what you can borrow.

That said, neither Springer nor I suggest opening accounts without the intention of using them just to get the scoring bump.

Eventually the inquiry and the account will come off your reports naturally. Hard pulls remain on reports for two years and are only factored into your score for the first one. The account will stay for 10 years from the date of last activity, which may be when you opened it. Or if you cancel it, it would be factored until a decade after that date.

Don't bother trying to change what you've already done; influence the future in positive ways. Borrow and repay perfectly, and only apply for loans and credit cards that you truly want.

Remember: “What's past is prologue.” “The Tempest.”

Got a question for Erica? Send her an email.




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