Canceling a credit card is part of the process of having credit, but it can be tricky to cancel a card and not mess up your credit score. If you don’t need to cancel a card, it’s recommended that you don’t, because sometimes leaving a card with little to no balance on it can be helpful in a pinch.
You should cancel a credit card when you can’t stop yourself from spending or racking up transactions on the card. Another reason to cancel a card if you’re paying fees on the card but don’t actually use it. Before you cancel a credit card, it’s important to think about what could happen to your credit score. A closed account with no balance will stay on your credit report for up to a decade. Any information on late payments or missed payments will remain on your credit report for seven years.
Even if you do things correctly, you may see a dip in your credit score when you cancel a credit card. If you do end up canceling a card, make sure it’s not the oldest account in your report, because that’s a huge part of how your score is calculated. Credit history is very important to lenders and creditors.
When you do decide to cancel one of your credit cards, don’t forget to redeem any points or perks you’ve accumulated in the process. You should also always pay your balance in full before canceling a card. Be sure to check in a few months on your credit report to make sure the account is closed.
Curious about what else can happen when you cancel a credit card? Contact Cain and Daniels today for more information.