My Credit Card Was Closed for Late Payments - Should I Reopen It?

Reader Question: My credit card was closed because of late payment. Will reopening this card help my credit rating?

Because the card issuer went so far as canceling the card, I'm assuming there was a history of late payments (as opposed to one isolated incident). If this is the case, they have probably already reported the late payments to the credit reporting agencies. If that's the case, it's already on your credit report as a negative entry, so reopening the card probably won't help you much.

I always tell people to make such decisions based on their overall financial needs, as opposed to their credit scores. So if you need to open a new credit card for financial reasons, then go ahead and do it. If you don't need one right now, then don't open a new card. If you decide to reopen the card in question, or an entirely new one, just be sure to make all of the future payments on time. That's the best thing you can do for your score.

Also, if you have outstanding debts to the company that closed the account, it's a good idea to pay that off. Credit card companies will typically transfer overdue accounts to a collection agency, and that agency will also make a negative entry on your credit report (in addition to calling you and sending you letters in the mail). Something to consider.