Credit Score News, Tips & Advice
Website CertifiedPrivacy Protected
Credit Score News, Tips & Advice « Credit Scores > Credit Score News > Citibank Clients at Risk of Credit Score Drop

Citibank Clients at Risk of Credit Score Drop

By Sally Maison
Published: Monday, October 26th, 2009

Clients for the New York-based Citibank will soon suffer drops in the credit score because the international bank is cancelling a number of customer accounts. Cards such as Shell Mastercards, Citgo, Exxonmobil, and Phillips 66-Conoco were canceled starting October 14, 2009. Consumers and advocates express worry over the changes, saying they were not given enough notice. The international bank continues closing cards this week, including those that are used regularly and paid on time.

Citibank Clients at Risk of Credit Score DropCitibank says the closure only affects a small percentage of its clientele. It also maintains that they have the right to close customer accounts under the terms of card membership agreements. The credit giant adds that closures are part of their regular check with clients, to know if a person is still fit to hold a Citibank card.

The changes were made almost a week ago but cardholders did not start getting any notice until October 19. Majority of consumers said they did not find out about the closure until gas stations rejected their cards. Consumers add that they do not have problems with their creditor’s decision, but its methods of doing so angered them. They expressed disappointment at Citibank’s delayed notice, saying it would have helped them prepare for the closure. Various consumer websites were flooded with complaints from people all over United State with similar experiences.

Citibank has not issued any statement yet regarding the delay in notifying its clients. It likewise chose not to reveal how many cards were shut down and how much available credit they represented.

Legal experts note that the bank has not violated any regulation since no law, including the recently passed Credit Card Accountability Responsibility and Disclosure (CARD) Act, prevents banks from closing any account without warning. Card issuers keep all the rights, which are listed on fine prints in contracts signed by consumers upon subscription.

As noted by specialists, Citi is not the healthiest bank, with $8 billion in consumer credit losses for its third quarter last week, including cards and mortgages. Card delinquencies, adversely impact not only lenders but consumer credit score as well, are projected to rise from 9.8% to 10% soon.

The recent closures are also another source of worry for many consumers since Citibank will report all closed accounts to credit bureaus, and when a card is canceled, a person’s credit score will suffer because less credit is available for him.

Amounts owed make up 30% of the total FICO score, the scoring method developed by Fair Isaac Company, which is also the most widely used globally. Proportion of the credit line is a significant part of amounts owed, which drops whenever a card is closed.

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.