Reader’s Question

Hello,
My mother used my name without my permission when i turned age 18. I found out about it when i turned 20. By then i owed about 12,000.00 dollars on 8 credit cards. I was able to remove 7 of them on my own. I was so happy. The last one is giving me problems. Its Capital One. 5,000.00 is owed. Half is all fees. I contacted the FTC, made a police report, and contacted the fraud department of Capital One, also sent many letters to the credit agencies. I call every week and have sent many letters. Nothing is helping. I am now age 24 and still cannot buy a car. How can I get it removed so i can buy a car or house someday?

Response

Hi [name removed] -
Unfortunately, your situation is not uncommon and it can be a hell of a task cleaning up the mess your mother created. However, you have made some good progress and taken all of the right steps to get this Capital One card taken care of. Capital One aren’t easy to deal with and I’ve also had problems. My recommendation is to contact the CEO directly. His office is pretty good about getting back to people if the problem is legit and it sounds like yours is. I suggest writing them a very kind and specific letter outlining your situation –similar to the letter you wrote me. Here is his mailing address:

Richard Fairbank, CEO
Capital One
1500 Capital One Drive
Richmond, VA 23285-5520

Let me know how this works out.
Best,
Ashley

Many people will close credit card accounts in an attempt to rid themselves of temptation. Some people may even believe that closing credit card accounts will improve their credit score. I made this mistake. In fact, closing credit card accounts seemed logical to me at the time. I thought, “Ok, I have a bunch of credit cards, I have paid them off, and I don’t want to be tempted to use them again so I better close these accounts.” I also said to myself, “Hey, this will improve my credit score too! The magic FICO credit score generator will see that I am acting responsible by closing credit card accounts after I paid them off!” This couldn’t have been farther from the truth. Three months after I closed 3 out of 4 of my credit cards, my credit score dropped about 100 points.

Remember: your credit score is largely based on how well you manage open credit accounts. If the account is closed, there is nothing to go off of except the account history (which is probably bad if you closed the account). An excellent credit score reflects that the individual has had long term, well-managed credit accounts. Also, while it is true that too many open credit card (revolving) accounts can hurt your credit score, the key is to shy away from opening too many accounts, not closing the accounts. Never close an open credit card account –it will hurt your credit score.

What if I can’t control my spending?

Easy: throw the card in the garbage (cut it up first) and forget that it ever existed. Therefore the account is still technically open and is reported on your credit report –you just don’t have access to it. The key to building great credit more than anything is time. Open 2 or 3 credit card accounts and keep them open for at least 7 years. If you have bad credit and can’t get a normal credit card, get a secured credit card from Credit.com.

Attempt to reopen charge off accounts

Another technique you can try if you have already closed a credit card account is to contact the creditor and ask if they will consider reopening the account. You can be certain that they will recheck your credit report, so this usually only works if you have showed some improvement. You can also attempt to send them a small down payment to show that you will honor your agreements. This will only work with small creditors –Citibank, Capital One, Chase are too big to take notice.

Here is how I got Capital One to reopen my account after I paid off the balance and closed the account: First I got two other credit cards (one secured and one gas card). I kept up on the payments for one year. After the one year was up, I called their customer support and asked if they would “kindly consider reopening my account based on the recent steps I have taken to improve my credit score and the accounts I have in good standing as of right now.” They checked my credit report and a few weeks later I received a new Capital One credit card with a $500 limit.

Take home points:

1. Never close credit card accounts that are in good standing.
2. Avoid bad credit by not opening too many credit card accounts. (2 or 3 credit cards is plenty)
3. If you can’t control your spending it’s better to throw away the credit card than to close the account.
4. Attempt to reopen closed credit card accounts by contacting the creditor after you have proved that you can be trusted.