New credit line opened in error. Should I close it?

I have an excellent credit rating. I recently filled out a World Market credit card application to get 10% off a sizable purchase. After discussing it further with the sales associate, I decided I did not want to open the account. Unfortunately, the application was already faxed and the account was activated with a $3000.00 limit. There was never anything charged to the account (balance $0). I have read that closing active credit accounts can actually negatively effect your credit rating. What is the best thing to do in order to make sure that my credit rating does not go down? I never plan on using the account. So should I close it or leave it open? If I close it, should I attempt to have a special comment placed or is "Account Closed by Consumer" an OK way to go? My revolving utilization is probably pretty good (~$2000 to $3000 charged (and paid in full) a month on AMEX with overall open credit of ~$30,000). We are thinking of purchasing a new house soon.

Any professional advice is welcome.

Thanks.

Opening a new account could lower your scores a little initially due to the hard inquiry, new balance (if any) and the fact that it's a brand new account (no history). However, if you didn't charge a balance on the account and you now have $3,000 in additional available credit..this could actually help lower your revolving utilization percentage and increase your scores.

At this point, the damage of opening an account has already been done. It would be best to just go ahead and leave it open.

Also, there is no difference between "Account Closed by Consumer" or "Account Closed by Issuer". As far as your scores are concerned, it's just looking to see if the account is open or closed. You can read more about this topic here: Account Closed: If a lender decides to close my account, will it hurt my FICO scores?

Hope this helps,
Deanna

This message was edited 3 times. Last update was at 10/27/2009

I'm in a similar situation as alexreed. I own three credit cards, all of which I just barely manage to pay off monthly. One credit card (opened approx 2 years ago) in particular is never used, which also carries a hefty $125 yearly membership fee. I would like to cancel the card, since it's never used and avoid the membership fee. How will this affect my high fico score?
Thanks in Advance!

This message was edited 1 time. Last update was at 10/28/2009

If you have a high credit score it probably won't make a huge difference, but I can't say for sure. I personally wouldn't keep paying $125 just to hope keep my score up.

But if your other cards are maxxed out, is your score really high? If you haven't already tried our free Credit Report Card? I would recommend you do so. Let me know what you find out before you take any additional steps.

Hi Gerri,
Thanks for your quick response. I received a credit check a few months ago, everything looks ok. My credit cards are not maxed out and didn't intend to say my credit cards are maxed out. However I meant to say they are paid in full each month. So do you think it's ok to cancel the card? Thanks

My strong hunch is yes, but I absolve myself of any liability if I am wrong!

It sounds like you have other accounts, on-time payments, and and plenty of available credit.

You may want to do a "before" and "after" of your credit score. You can get a free estimate of your scores every month with Credit.com's free Credit Report Card. It's a "soft inquiry" and doesn't hurt your credit.

Don't be alarmed if you scores take a small dip after you close out the account. If that does happen it will likely level off in a couple of months.