17 Jul Will store’s bankruptcy hurt my credit score?

Q. I have five or six open credit card accounts, plus a department store credit card that I will no longer be able to use because the company is filing for bankruptcy. I owed no balance on it, and being that this is beyond my control, do you think it will still lower my credit score? It’s one of my older cards.
— Credit user

A. Your premise that the account will vanish because the department store is filing for bankruptcy may be incorrect.

It’s possible another credit card issuer may purchase the card customer base and keep the accounts intact, said Christine DiGangi of MagnifyMoney.com. It’s also possible the store will continue operations, as bankruptcy doesn’t always mean closing the chain entirely, she said.

“That said, if the card is closed the two most direct ways it may impact a credit score are the length of credit history, which is about 15 percent of a FICO score, and amounts owed, which is about 30 percent of a score,” she said.

DiGangi said with five or six other open cards, losing one shouldn’t have a large impact on a score, assuming the others have been open for several years, and considering length of credit history is one of the smallest credit score factors to calculating a score.

“As for amounts owed, store cards tend to have lower credit limits than regular credit cards, so losing that credit line shouldn’t have a large impact in the context of five other cards,” she said. “If the reader has been paying the five other cards on time for many years, and doesn’t keep large balances on them, there’s not much to worry about.”

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