Expert: David McArthur - 3/28/2009

Question
Over the past few years, I have rebuilt my credit score from the mid 500’s to the low 700’s. I have an old Macy’s card (opened in 1992) that still shows as open on my reports, but they have dropped the limit to $100.

Because the age of the account is good but the low limit is bad, I’m not sure what to do with it. Since it is a store card rather than a bank card, does it even make much difference? Should I close it, leave it alone, or request a limit increase?

(I have no other open store cards, and I have one bank card with a zero balance. I have no remaining revolving debt.)


Answer
Closing it would be a bad idea.  Store cards help your credit just like a credit card as long as they report.  Low limits do not have a bad effect on your credit.  It is the percentage of credit limit used that matters, not the size of the limit.  Part of your credit score is based on length of credit history, so keeping old accounts helps a lot.  I would request a limit increase if for no other reason than you may want to use it someday for something that cost more than $100.