Card companies are closing unused accounts

Have a credit card you haven't used in the last year or so? It might be canceled.

Numerous credit card companies are cutting costs by closing accounts due to inactivity, and they're doing it without warning.

Can this ding your credit score? The simple answer is: Yep.

"This is their legal right, but it can also negatively affect your credit score," Jonathan at My Money Blog reports.

Great. That's all you need right now, with more lenders demanding higher credit scores from prospective borrowers.

Here's what Jonathan suggests you do (but first read his explanation of how your credit score is calculated, as well as this MSN Money story, which details new changes to the FICO credit score):

• Review your credit card information. If you think you may have accounts you've lost track of, a free credit report from AnnualCreditReport.com will show which accounts are still open.
• Rank them. Jonathan writes that "credit cards with high limits and long histories are the best. Newer credit cards with low limits are least important" to your credit score.
• Use the cards you want to keep. We don't suggest you run to the mall. Use the cards to pay regular bills or to buy gas -- and pay off what you owe each month.

Jonathan suggests you may be better off canceling the cards you don't want to keep, heading the credit card companies off at the pass. He says it may look better to lenders who pull your credit reports to read "closed by consumer" rather than "closed by creditor."

If an account you want to keep has been closed, Jason at Frugal Dad says you can call and ask that it be reopened.

Related reading:

• New threats to credit scores
• Feds ban ‘unfair' credit card rules 

Published Jan. 14, 2009