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I recently opened a Walmart card account last week with the promotion they had going on. Today I got a credit alert and when I checked it, I noticed my score was a few points lower, seven to be exact.

While I'm aware that this usually happens, I've read a lot of bad reviews for the Walmart card. Especially the one about how they raise and lower your limit without warning, even when your payments have been paid on time. It's just a lot to take in. But it's just that when I was asked, the clerk made it seem like it was so great, no justification here. Although I'm a very frequent Walmart shopper, I feel that it wasn't the best thing to do.

So my question is, would it do my credit score greater damage if I close it?

I mean it's so new that I haven't even received my card yet. I feel so stupid because I could've easily paid the bill that was accumulated that day in the store, and I don't know why I didn't. I'm going to call Walmart customer service to pay it, but my question still stands if it's going to be a bad move or not to close it. Any advice is greatly appreciated.

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First of all, a small jig in your credit score is to be expected any time you open a card, as it counts as a recent credit inquiry and as a newer account, . Seven points is in that range, and is not something you should be overly concerned about; that part will come back in six to twelve months. It's possible a few of those points are due to the increase in your overall outstanding credit; that of course will not directly come back, though if your credit history is clear, it ends up not mattering much, and higher limits are helpful, particularly if it means a better debt:credit ratio.

That said, if you choose to close the card for your own reasons - of which it looks like you have several - it won't do much if any harm to your credit. Assuming you have other sources of credit, unless this card is significantly improving your debt:credit ratio (this might be the case if you have several maxed out cards and little available credit, though as a store card it likely has less if any impact on that aspect), closing it won't hurt at all. It's not old enough to be your oldest open account, likely, and even if it were it's not exactly very old.

You won't get all of those seven points back right away if it's closed; they'll come back in six to twelve months on their own (whether you close it or not). Some might come back right away, as the average age of your credit accounts becomes older again.

So - ultimately, this likely doesn't affect your credit one way or the other; make your decision based on your comfort level with the card itself.

See This Fair Isaac page on New Credit for a more detailed explanation on how new credit can affect your credit score.

Finally, if you have (or sign up for) an account at CreditKarma, they have a score simulator that lets you see what happens if you do various things. It won't show you what closing this card would do, I don't believe (only your 'oldest' card, from my memory) but it would show you how much it would affect things to add another, similar card. Maybe good to use next time, at least, so you know what's going to happen and aren't surprised.

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Close the account.

There are a couple of reasons why the "conventional wisdom" tells us to leave these accounts open, all related to your credit score:

  • "It will lower your average age of credit accounts." Actually, in this case, because this is a new account, when you close it, your average age will improve, back to where it was before you opened it.
  • "It will lower your available credit, which will worsen your credit utilization." Actually, by closing this account, your credit utilization will return to what it was before you got the account.

The reason that your credit score took a slight dip is that when you applied for the new account, a credit inquiry appeared on your report. This is only temporary and will go away in a few months.

If you want to close the account, there is no good reason to keep it.

  • Note that high credit utilization (as a percentage of available credit) is bad. By closing the account, the OP's utilization will increase and credit score will drop. – farnsy Feb 18 '16 at 0:27
  • @farnsy The OP's utilization won't be any worse than it was before the OP took out the new account. – Ben Miller Feb 18 '16 at 0:44
  • True, but it will be worse than when the account was open. If maximizing credit score is a priority, I think it's fair to say that keeping the account open is better, contrary to the spirit of your closing comment. – farnsy Feb 18 '16 at 3:00
  • @farnsy I didn't get the impression that the OP was concerned about maximizing her score. She regretted opening the account and wanted to close it, and just wanted to make sure that closing it wouldn't hurt her score even more. If she closes it, she should be back to where she was before opening it after the inquiry falls off. – Ben Miller Feb 18 '16 at 3:08
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The drop in your credit (which is nothing to worry about because it's small and temporary) is because they had to check your credit when they gave you the card. Getting rid of this account will not raise your credit to where it was.

Closing the account will likely lower your credit further by reducing the total unused credit you have (more is better) and reducing the number of credit accounts you have (more is generally better). The average age of your accounts will go up if you close your account, which may increase your credit score, but not by as much as the other factors will push it down.

Overall, if your credit score is what you care about, don't close the account. If you don't like Walmart's practices or something, just don't use it. It won't hurt you sitting in your drawer and will help your credit eventually, particularly if you use it a little, pay it off, and then don't use it any more.

Dropping it won't hurt you much either, though. We are talking about small changes to your credit here.

  • I agree with the first paragraph, but closing a new account won't change much of anything, it probably isn't even reporting yet! – CQM Feb 18 '16 at 1:37
  • It is true that closing the account will change little relative to the time before the account was opened, but the OP is comparing the world in which he leaves the card in a drawer with the one in which he closes the account. In the latter case his credit is lower than in the former. – farnsy Feb 18 '16 at 3:02
  • I see, I didn't make that assumption, I re-read the original question and only see about the course of action and consequences here and now. – CQM Feb 18 '16 at 3:46

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