Can Canceling a Credit Card Hurt Your Credit?

People are always curious to know if closing a credit card account will hurt their credit. Opionions vary on this subject, but I will try to give you the most accurate information I possibly can!

Say you have a couple clothing store credit cards collecting dust in your wallet and you'd like to close them and forget them. But, closing a credit account does hurt your credit, but only slightly. It makes the ratio of your debt to available credit higher, which makes you look like you have more debt than before you closed the card. The only reason you'd need to close a credit account is if you are trying to establish credit elsewhere (like for a car loan). Having too much open credit is a reason you can be declined. It is recommended that you don't close more than one line of credit in a 6 month time frame.

The type of credit you have also plays a roll. If you are still young and still establishing credit, go ahead and leave the credit cards open for a while. After you have established a little bit of credit (mortgage, car loan, school loan) the credit cards play a much smaller roll.

If you are simply trying to avoid spending any amount of the cards, cut them up and throw them away. It leaves them open for credit purposes, but does not affect your wallet! Just make sure you check on the balances once in a while to make sure there are no fragulent charges being made. Remember, while it is nice in the eyes of a bank for you have credit cards that are paid and have no balance, they also view the down side of you having an "easy way out" in the case of an emergency, and you can rack up debt and they will be leary of granting you credit.

There was a woman who had evetually racked up 19 credit cards...none of them had a balance so she decided to canel 16 of them all at once. She said her credit score dropped 20 points and 5 months later had risen nearly 60 points. So in her eyes it was well worth it to get the score boost!

Just be mindful of your own personal situation, if you truely need the cards, keep them open. If you are not using them and dont mind your credit score dropping a few points go ahead and snip them and keep the credit lines open.