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'What Happens to My Card If a Store Closes? Will It Fix My Credit?'

  • By Credit Diva of Dallas
  • 17 Sep, 2020

With a rise in bankruptcies and retail store closings in 2020, you might be wondering what happens to your store credit card and account if your favorite retailer is no longer in business. From clothing stores to other chains and small retailers, businesses in Dallas and around the country are reducing the number of open retail locations or shuttering all stores as a result of the recession.

Beautiful black girl with shopping bags in a cityWhat does that mean for you if you have a store credit card? If you've been asking, 'Will a store card closing fix my credit?' You should know that losing a credit account can have an impact on your credit score and the repair process. Here's what you need to know about your retail credit card when a store closes. 

What Happens to the Card?

Retail credit cards are only valid at the store that issued the card. However, whether you chose the card to get a discount on a purchase or you use it regularly, it's a "real" credit card that impacts your credit score

When a Dallas retailer goes out of business and closes all retails options (both in-person stores and online purchases), your card is no longer valid for use. That means:

  • The account will close: You'll no longer be able to use the card to purchase merchandise from that retailer. 
  • Rewards go away: In most cases, if you also earn reward points or other perks when using the card for store purchases, those rewards go away. You won't receive cashback or a discount on your balance in exchange for rewards you can no longer redeem. 
  • You still owe the remaining balance: If you're still paying off the balance for purchases using the card, that balance doesn't go away when the account closes. 

Make sure you pay attention to that last point! Even though you can't add more purchases to the card, you will still need to pay off the outstanding balance—even after the store closes.

What Happens to My Credit? 

This is where you might be asking yourself, 'Will paying off that balance fix my credit? Will the store closing harm my credit?' it's critical to keep an eye on your credit score during this time. When you learn about the closing of a retail credit account, it's time to review your credit report. 

If you carry a balance, pay off the remaining amount as soon as possible. However, even if you don't carry a balance on your store card, your credit score could see an impact after the store account closes. When an account closes, your credit utilization rate will go up. Here's why:

  • The closed card reduces the amount of available credit you have on your credit report. 
  • Without that credit at your disposal, your utilization rate increases. 

That doesn't mean you should immediately open another retail credit card to add more available credit to your credit report. You should also be careful if the retailer offers an alternative credit card when they close your account. Moving your store balance to another card might not be the best way to improve your credit score.

  • Check your credit report and maintain a credit utilization rate below 30%.
  • If you see your rate jump up after a retail account closes, work with trusted credit repair, Dallas, to find the best ways to reduce that rate again. 

Falling credit cards'When a Store Card Closes, Is It Time to Fix My Credit?'

Shooting for a perfect credit score might not be necessary, but there's never a bad time to ask this question. Don't wait to find out how the closing of your favorite retailer and credit card account affects your credit score. Take action to review your credit report and work with a reputable credit repair partner in Dallas!

Credit Diva of Dallas can help you with a plan to keep your credit utilization rate low and minimize the impact of a closed retail credit card on your credit score. Contact us for a consultation to fix your credit!

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