There are many reasons why you may want to cancel your credit card, including expensive annual fees, high interest rates, low benefits, infrequent use, or your balance has been transferred to a new card. However, before canceling a credit card, even if you have a real reason, you must understand the consequences of doing so.
Canceling a credit card may affect your credit score, so please manage it instead of closing it.
Factors affecting your credit score
These factors will affect your credit score:
How can turning off your credit card hurt your credit score
You might think that turning off your credit card is a wise choice. However, closing the credit card may have a negative impact on some of the credit scoring factors mentioned above. After closing the credit card, you may face the following consequences:
How to improve your credit score by using credit cards responsibly
If you want to improve your credit score, the credit limit used must not exceed 30% of the available credit limit. If you keep your credit utilization rate below 20%, you will get an excellent credit score. When you try to use the maximum available credit limit of your credit card, your credit score will be poor. To get a good credit score, you need to have a record of paying debts on time.
Related reading: Credit Repair Guide: How to Improve Bad Credit Score
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