Will Canceling Credit Cards Damage My Credit Score?
Through life, there are countless reasons for opening up lines of credit with a credit card. Whether you're taking advantage of a retail store's rewards program, accumulating flight or hotel points, or need an emergency fund, it's understandable that over time these cards can add up and fill your wallet — even if you aren't using them.
Beyond the obvious interests and late fees, another concern consumers should be mindful of are the annual fees that can accrue with each additional credit card you open. Especially if your credit card gets less and less use over time, these fees can add up and become a burden you no longer want to bear. There may come a time when you decide to get rid of some of those cards, but how does that affect your credit score?
There are different credit bureaus, types of credit scores, and policies that change the way those entities calculate your score. All of which can lead to confusing information. As experienced consumer credit protection attorneys in Kansas City, we're here to help set the record straight.
The Effect of Canceling Credit Cards
After you’ve worked hard to build a good credit score, you likely want to take precautions in an effort to protect that. While normally you don’t want to close a credit account unless you have to, two very good reasons for closing a credit card are:
To remove spending temptations that are difficult for you to control.Paying annual fees for cards you no longer use.
The good news is there is no hard evidence that your score would take a hit after canceling any amount of cards that you deem no longer necessary. In fact, by taking the right measures, you can close an account without hurting your credit score.
Important Factors of Your Credit Score
According to CreditCards.com, closing an account with no balance and no late or missed payments will remain on your credit score for approximately 10 years as positive information. Sounds great, right? Read on to learn how you can ensure this is the case for you when canceling your credit card(s).
Be Mindful of Your Credit Utilization Ratio
Before running to cut up useless credit cards, it’s important to evaluate and implement a strategic plan so that your credit score remains unaffected. An important factor for your score is the credit utilization ratio — this compares the amount of credit you are using to the total amount of credit available to you. One best practice is to pay off all balances before closing any account. That way, your credit utilization ratio will be zero and won't be impacted by the loss of a balance.
Cancel Newer Accounts First
If your credit score is important to you, so should the history you have with any particular card. The age of your credit card account is an important consideration for most companies in factoring your score. Ideally, you have a longer and more positive history to prove that you deserve that high score and are not a credit risk — this is why it makes sense to close a newer account before an older one. However, always be sure to redeem any outstanding rewards before moving forward with closing any account.
Consumer Credit Protection Attorneys in Kansas City, MO
The world of credit can be confusing to keep up with, but it can have a significant impact on your life! Don't risk negatively affecting your credit score by not reaching out for the professional help you need. As experienced credit consumer attorneys, our job is to protect you and fight for your rights to the best of our ability. Based in Kansas City, Missouri, we serve clients across the state in St. Louis, as well as those in Kansas City, Kansas, and Omaha, Nebraska. Call our firm today to set up a no-cost evaluation and learn how we can help you through your credit issue.