In many cases when you cancel a credit card, your credit score will take a hit. There are a couple of reasons for this. If the card that you cancel happens to be the one that you have had the longest, cancelling it shortens your credit history, which can lower the score. In addition, you lose the available credit on the credit card which can make it appear that your debt to credit limit ratio is higher. Again, this is a change that can hurt your credit score.
The good news is that when you close a credit card due to fraud or possible compromise, you’re usually able to avoid both of these scenarios. In these situations, when the account is closed the reason for the closure will be noted as lost, stolen or compromised with a new account immediately opened. They may also not close the account at all, but simply change the account number for the current account. When either of these options are done, all the history and information from the old account is transferred to the newly opened card. This means that the open date of the card remains the same. You should be able to keep your entire credit card history, and as long as the date the original credit card was opened doesn’t change, there should be no negative effect to your credit score.
In addition, the new card you are issued will have the same balance and credit limit as the original card. This means that the debt to available credit will, again, remain the same so as not to do any damage to your credit score. Thus, when it comes to your credit score, requesting a new credit card in this situation should not change your current score.
It’s important to note that if you do change your credit card, you won’t be able to use it for the holiday shopping season until the new card arrives. Most credit card issuers offer express delivery of new cards within a day, but you will need to pay a fee for this service.
It’s also crucial that you make sure to notify any merchants where you have automated payments set up on the card of this change, so that these transactions don’t get denied. While doing this may seem to be an inconvenience, it will be much less of one than if you have to do all this after unauthorized purchases have been made on your card.
Also note that due to your account being compromised, you can get a free credit report from each of the main credit reporting agencies (Equifax, Experian and TransUnion) to check to make sure that no unauthorized or fraudulent information is appearing on them.
(Photo courtesy of Kevin Dooley)