Does Cancelling A Credit Card Hurt Your Credit Score?

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3 years ago


Think Twice Before Cancelling That Card!!

If you recently paid off your credit card or are trying to lighten your wallet, you might be tempted to cancel a credit card or two. But, before you start snipping the card be sure it’s not going to negatively impact your credit score because that will come to haunt you later on in life when looking for a house, car, or asking for a loan.

One very important section in analyzing your credit score is where it says how long you have had your card open for. This only works for active cards. Cancelled cards are excluded from the calculation. Leaving an old card open can help with your credit score even if you don’t use it any more.


Another fun fact is that banks like to see you use 30% or less of your available credit, even if you pay off your balance every month. Closing a card can make it seem like you spend more than you should. For example, 30% of $4,000 in available credit means you can spend up to $1,200 a month. 30% of $2,000 in available credit means you can only spend up to $600 a month.

So, overall keeping credit cards open even though they are not in use is probably a good idea especially if your credit score needs a little boost. You can still take them out of your wallet just put them somewhere safe at home. The only time it makes sense to close an old card is if it has an annual fee. That’s never a good idea.