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You decide to cancel a credit card that was never activated. Do you know how it will affect your FICO score to do so?
According to the consumer operations manager at FICO, the effect of closing an account that was never opened depends on one thing: whether the account was ever reported to the credit bureaus. Basically, if the credit card account was never reported to the bureaus or you cancel the account before it is, you’re in the clear and closing the account won’t affect your credit score. If, on the other hand, the account was reported, closing it will negatively affect your credit history. Still, the inquiry from the credit application will remain on your credit report for up to two years, affecting your score for an entire year whether the account was reported or not.
To get a better understanding of the situation, look at American Express’s reporting procedure for new accounts. According to AmEx, new credit card accounts are reported to the bureaus one billing cycle after the application is approved, whether or not the card is activated. If you wait a few months to close the account, it will still show up on your credit report. If you close the account before the month is up, chances are low the account will ever appear on your credit history. The closed account can remain on your credit report for up to 10 years if it has been reported.
The best way to see if a new account has been reported to your credit report is to obtain a free copy of your credit report from annualcreditreport.com. This website allows you to get a copy of your credit report from TransUnion, Experian and Equifax for free once every 12 months. You can also read more about the effect of closing credit card accounts by reading “Closing Credit Card Accounts: Can It Lower Your Score?”