It’s Okay To Cancel Your Credit Card
Published May 19th, 2008 in Credit Help and Tips.
Many people seem to be under the impression these days that canceling your credit card will be to the detriment of your credit score.
This has been widely blown out of proportion, to the point where consumers are afraid to close an unused credit card, despite the fact that they may carry a dozen cards.
So let’s great this straight to determine if canceling your credit card will have any negative effect on your current situation.
First of all, old tradelines are king, so closing your oldest credit card may not be very wise. Conversely, if it’s a relatively new card, with less than two years of history, it shouldn’t be too hard of a decision.
Secondly, if you’ve only got a few lines of credit, or just one, it’s probably not wise to close that credit card account, as it’s generally positive to have open lines of credit with decent history on them.
Keep in mind that those with less established credit and fewer open lines of credit will see a more substantial credit score ding than those with a deep credit history because any change to your credit profile will be more meaningful.
The consumer with 30 years of credit history won’t be hit nearly as hard as the borrower who is just setting out to create a credit profile.
All that said, if your open credit card poses a threat to you for whatever reason, it’s worth canceling it to ensure it doesn’t get you into any trouble.
After all, the only time you really need to be this cautious with your credit score is before and during a major financing decision, such as a home loan application or a car lease.
If you’re not planning to apply for major financing any time soon, don’t fret about a closed account. Your score may drop a few points, but as long as you pay bills on time and keep balances low, you’ll be just fine.
One final thing to note is that your credit score may actually improve if you close a credit card, as you may have too many open revolving accounts, which could suppress your credit score.
Now there’s just the trick of actually getting the credit card closed, which card issuers won’t be very forthcoming about.
(photo: liznoise)
