BY ALLISON KAPLAN
Knight Ridder Newspapers
August 17, 2004

ST. PAUL, Minn. - (KRT) - Mervyn's Minnesota stores closed recently, but your Mervyn's credit card remains open.

Don't be fooled into thinking going out of business means a retailer will have the courtesy to cancel credit for you. Especially in Mervyn's case, since stores still will be open in other states.

Simply cutting up the card doesn't make it go away, either. You must explicitly demand the account be closed and get verification in writing. You'll also have to pay off the balance first. When I called Mervyn's (800-659-2396), I was told written confirmation would arrive in the mail within 10 days.

Credit counselor Jody Anderson has her doubts. As director of a Lutheran Social Services program to help people get out of debt, she says the surest way to close an account and not have it come back to haunt you is to do so in writing. Send a letter to the "inquiries" address on your credit card statement - not the bill-paying address - and request written verification.

It can take three months for a closed account to show up on your credit report. And that credit report is the key. Too much open credit can count against you when you're trying to get a major bank loan. Even if there's no balance, lenders see that you have the ability to charge thousands and may offer a smaller loan.

Still, consumers often lose track of their retail credit cards. It's so easy to open one, get 10 percent off that initial purchase and then stick the card in a drawer. "It's dangerous to have dormant cards out there," Anderson says. "Those are often the ones used in credit card fraud."

Retail credit cards also tend to carry higher interest rates. "There's hardly a store that doesn't take Visa or MasterCard," Anderson says.

Sheepishly, I tell her that I enjoy the $15 off coupons Banana Republic sends me when I've charged enough on my store card. And the free gift-wrap and coffees that come with a Marshall Field's Regards card are nice.

"That's what store cards are good for - special sales and promotions," Anderson says. If you shop heavily at a particular store and keep up with your payments, a store card can be worthwhile. For a major purchase, it might make sense to open a store account and reap the one-time discount - provided you take the proper steps to close the card once the bill is paid.

Just keep in mind that even when accounts are closed, they can remain on your credit report for years. A pattern of frequent openings and closings will raise a red flag, credit experts say.

Bottom line, says Anderson: A single Visa or MasterCard is plenty for most people.

So don't just clean out your wallet, search your drawers for forgotten store cards. Once you get them closed, check your credit report - and get in the habit of doing this annually. Here are the agencies:

_Equifax: (800) 270-3435, www.equifax.com

_Experian: (888) 397-3742, www.experian.com

_Trans Union: (800) 888-4213, www.transunion.com

For around $40, you can get a tri-bureau report and your credit score, which is useful, Anderson says, since each agency's records may vary and credit scores are used in determining loans. A good resource for credit scores and triple reports is www.myfico.com.

If you want to have your report and credit score reviewed by a credit expert, call Lutheran Social Services at 888-577-2227. There's a $30 fee for the service and the report.

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