Reader Question: Scoring Impact of the Macy's & Citibank Promo

The Macy's & Citibank credit card marketing story continues to get a lot of attention. Our previous post deciphering the situation is littered with angry customer comments and experiences. If you're not familiar with the story, inactive Macy's cardholders recently had their accounts closed and a new Citibank credit card sent to their homes. Pretty messy stuff.

Readers and personal finance reporters have been asking about the impact of this Macy's Citibank switcheroo on credit scores. We've learned a bit more about the case and have new score-impact details to report:

• Inquiry - Citibank is claiming that the credit report inquiry for the new account was "soft" not "hard." This means that they checked the customer's credit as an account review and that the credit check will not hurt the consumers credit score. If you check your credit report through www.annualcreditreport.com, make sure that the inquiry is listed in the correct category. Soft inquiries are recorded on this disclosure report, but not on a credit report you purchase.
• Closing the Macy's Account - Originally, we were unsure if the new account would just take over the old tradeline. Now, we know that the original Macy's account was fully closed by the issuer. This closure can have a negative credit score impact. The damage will be worse if the Macy's card was one of the oldest on the consumer's credit report, had one of the highest credit limits or was one of only a few cards.
• Opening the New Account - We were also unsure if the new account would start reporting to the credit bureaus before it was activated by the user. It appears that the new Citibank accounts are being reported to the bureaus right away. Even if the user calls and closes the Citibank account without activating it, this record will remain on their credit report for 7 years. Having a newly opened account can hurt your score by changing the average age of accounts on your report.

How much could these changes impact your credit score? Potentially, quite a bit. We got an email from one customer who reported that her score dropped from 657 to 635 cause of the Macy's/Citibank card in the middle of trying to buy a home. Because of the score drop, she wasn't able to get a loan and had to abandon the purchase.

Keep the emails and comments coming! We're here to help.

Emily Davidson – Credit.com's Communication Director and former TransUnion credit expert. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com moderator.                        

Comments

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