Does it matter if CCs are closed by cardholder?

[nickifan]

OOPS...TITLE SHOULD SAY CLOSED BY CARD COMPANY

I'm starting to get the dark comments in OC letters and calls that my account will be Closed by xx date because I'm going on three months' overdue, and how badly this will affect my credit report.

Yeah, I know that. But does it matter _going forward, after BK, when I assume all cards discharged will say Included In Bankruptcy on the report?

In other words, if the account was still open but months overdue for payment, is that any "better" than having the credit card company close it for the non-payment?

I did have to chuckle at the automatic text on one card's letter...it says that my card is two months' past due and my "credit privileges have been discontinued." Um, guys...look at your records: the account has been CLOSED FOR TEN YEARS!! (As I noted in another thread...that was a real wake-up for me to see that even without any new charges, I still was paying off that card after 10 years -- and have $1100 left on it!)

[flyinbroke]

Supposedly no. The freecreditreport sites will have you believe that "closed by credit grantor" is a ding but it is not. I suppose some lenders view that as a negative, but I was having stuff closed for inactivity, and "because we can" long before I stopped paying. I had a score in the 700s and was getting "closed by creditor" because they felt like closing stuff.

If a lender has issues with that, I will take my business and my money elsewhere.

[catleg]

The best thing you can do for yourself is to forget about your credit score.

It's hard tuning out the noise about credit monitoring, identity theft, all being pushed in your face all the time. It's all about selling you more stuff you don't need.

I have put a credit freeze and promotional offer block on both my wife's and my own credit reports. We don't need or want credit anymore.

Every so often I dispute my (free) credit report just to force them to mail me another 40-50 pages of nonsense. The game is rigged, I do what I can to not be profitable for them.

[nickifan]

The best thing you can do for yourself is to forget about your credit score.

It's hard tuning out the noise about credit monitoring, identity theft, all being pushed in your face all the time. It's all about selling you more stuff you don't need.

I have put a credit freeze and promotional offer block on both my wife's and my own credit reports. We don't need or want credit anymore.

Every so often I dispute my (free) credit report just to force them to mail me another 40-50 pages of nonsense. The game is rigged, I do what I can to not be profitable for them.

Yeah, for the most part I am tuning it out. I will likely never buy a home again so that's when it (score) matters most, right? I guess in a weird way I was thinking that "closed by CC company" makes me look like more of a deadbeat than "account closed by cardholder." Then again, they will all ultimately say "included in BK."

As for your occasional disputes...the few times I have challenged a report I just get a one-page letter in the mail noting that they made the change....?
How is it you get the entire report again??? I wuz robbed!

[treehugger1]

This could turn out to be a great thread. Personally, I don't give a damn about my credit ratings any longer. Psychologically, this can be a big hurdle for many folks. Once I got over this hurdle, my financial issues became more settled in my mind. There are a few issues.

1) Auto insurance in some states

2) Employment applications in some states. Oregon currently has a bill in the legislature that will make it illegal to use credit checks for employment purposes with a few exceptions. Since Oregon has an unemployment rate of 10%, you can probably see where this is coming from. Actually, the true unemployment rate here is probably much higher.

3) Big medical/dental procedures might be affected by your ability to obtain credit.

4) Car loans, when you need to purchase a vehicle. On the other hand, if you build a plan to put so much away for savings to buy the items such as cars, even if you can save 30% or more for a down payment, the future might show many auto manufacturers to be willing to provide some type of financing.

What else might we include on this list. I'm assuming buying a house is not in one's near-term plans.

I am meeting many people who have adopted the policy of increasing contributions into retirement plans that allow for loans. Financial planners scream about this as a big no-no, but if you can take a responsible view and actions, then this could be a reasonable approach to lending. Borrow the money from yourself. For me, this is an excellent approach. In fact, I even get the interest returned to me if I choose to use one of my optional retirement plans as a "bank."

What other ideas/issues are out there? Pro and con?

[catleg]

How sick is this?

Buy Now, Pay Later (Maybe With Your Allowance)
By RANDALL STROSS

BUSINESSES don’t let 13-year-olds pay for purchases with a promise. At least they didn’t before last week.

A new payment option for anyone without a credit card or a debit card, no matter how young, has just become available. It’s initially offered by FooPets and Puzzle Pirates, online game companies that are business partners of Kwedit.com, a start-up based in Mountain View, Calif.

Minors as well as adults can buy items in the games with a “Kwedit Promise,” which can be paid off later in a number of ways — with a credit or debit card, for example, or with cash sent in a mailer that Kwedit supplies.

But here’s an entirely new payment option: A user can print out a barcode and head to a 7-Eleven store, which will accept cash, scan the code and notify Kwedit that payment has been made. In the next three months, a Kwedit logo will join those for credit cards and other payment methods on the doors of all 7-Elevens, a company spokesman says.

As game purveyors, Kwedit’s current partners sell virtual goods whose marginal cost is virtually zero, so there’s no risk of real financial loss if the promise is not repaid. But by offering Kwedit’s service, the game publishers capitalize on the most frictionless form of sales: buy now, pay later.

At FooPets, users “adopt” lifelike digitally animated pets and then buy virtual goods for them, including food, beds and chew toys. The site’s core demographic is 12- to 14-year-old girls, said Scott Sorochak, a co-founder of FooMojo, which operates the site. The company says that FooPets has one million active members and that it is signing up 20,000 to 25,000 new members daily.

“Kwedit is the first payment system we’ve used that doesn’t require getting a parent involved,” Mr. Sorochak said.

Now an eighth grader, on her own, can use a Kwedit Promise to buy a virtual 40-pound bag of Purina Puppy Chow. The chow exists only as a photograph of a Purina package, but FooPets instructs its users that the care and feeding of the digital pets they’ve adopted should be regarded as a serious matter. “Your FooPet is a real creature that lives online,” the company’s Web site says.

It’s ontological nonsense, but the money that is paid for the pixels is certainly real. (The big bag of virtual puppy chow costs $3. For parents with deep pockets, a “rustic bungalow” is $333.)

Systems like these — known in the industry as nurturing games — are built to require regular investments of time and, for fullest enjoyment, money. The games are usually hosted by social networks like Facebook, or can connect to such networks so friends can follow one another’s progress. They feature living digital property — the crops in FarmVille or the fish in Happy Aquarium — that can die without care and feeding. At FooPets, death is averted because, after a short period of neglect, the pet goes to a FooShelter. (And reclaiming it becomes an expensive proposition.)

In 2008, about $510 million was spent on virtual goods in the United States, and last year the amount almost doubled, to $1.03 billion, according to a report prepared last month by Inside Network, a research firm based in San Francisco. Justin Smith, the company founder, estimates that the market will grow to $1.6 billion this year.

Kwedit’s system rewards users for repayment. Initially, the credit extended is modest, only $2 to $5. And a Kwedit score, modeled on a credit score for use by game publishers as a guide to how much credit should be extended, is set low.

“If you pay off your promise, your Kwedit score rises — and your Kwedit limit then rises,” said Loree Hirschman, Kwedit’s vice president for marketing. As more partner sites use Kwedit, users’ scores become more consequential.

Ms. Hirshman says it is refining an algorithm for setting credit limits. It seeks a sweet spot: high enough to encourage buying, but low enough so a debtor won’t be overwhelmed by the balance due.

Because Kwedit has just begun its service, there are no repayment data to examine. But users’ interest in protecting their scores may be powerful motivation. “That Kwedit score will go with you,” Mr. Sorochak said, “so, long run, if Kwedit is successful, that becomes the de facto virtual credit score, like Experian’s and the other FICO scores.”

In addition to FooPets and Puzzle Pirates, more than 1,000 games now let players use Kwedit’s arrangement with 7-Eleven as a way to pay cash for game currency, but their publishers insist that users pay before using the currency.

JOSEPH DePINTO, the C.E.O. of 7-Eleven, said that in the future, Kwedit barcodes could be used for actual goods as well as virtual dog food. A consumer would place an order online and pay in cash at a 7-Eleven; the scanned barcode would then instruct the seller to ship the item.

Kwedit Promise seems most likely to succeed, because it offers immediate gratification, allowing a user to buy while continuing to play a game. The Kwedit Promise is about as real as a FooPet. Even the company says that it’s just marketing and not an enforceable contract. But Kwedit is a way to become acquainted with credit early, while still on training wheels.

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: [email protected].

http://www.nytimes.com/2010/02/07/business/07digi.html?ref=business