Hey Buddy,
To answer your query, “does closing a credit card affect credit score?” You might be tempted to close an old credit card that is sitting idle in your wallet. You need to be informed of the many advantages of keeping an unused credit card open before you go ahead and cancel it.
Use your credit card to pay your utility bills via NoBroker and earn cashback on payments Earn exciting rewards on payment of your property rent through your credit cards via NoBroker.A person's credit score is influenced by a number of variables. Two of these several factors are related to an underused credit card:
History of credit used
Ratio of credit usage
Your usage of credit cards over time might be determined by the length of your credit history. The linked credit history is removed when an old card is closed, reducing the overall length of your credit history. This answers your query, will closing a credit card affect credit. Your credit score is impacted badly by this.
The credit utilisation ratio is the additional aspect to take into account. It's a ratio of the credit you're using to the overall credit that is available to you. The better, the lower the credit usage ratio. Let's use an illustration to clarify how does closing a credit card affect your credit; consider that you have two credit cards with respective credit limits of Rs. 50,000 and Rs. 30,000. Your available credit limit is reduced when you cancel the first card, which raises your credit usage percentage. The credit utilisation ratio decreases and your score goes down when you keep an unused credit card active. This suffices your query, does closing a credit card affect your credit score.
However, if you're paying a high annual fee on an unused credit card, shutting it might be the best course of action. So be sure to give your case great thought before deciding whether or not to maintain unused credit cards.
Alternatives to closing a credit card:Here are some suggestions if you want to avoid cancelling or closing your credit card and are looking for other solutions to the problems that were motivating you to do so:
Call your issuer to ask about lowering or waiving the annual fee if you were considering cancelling your credit card due to it. To keep their clients, some businesses could be prepared to take this step.
Put the card in a safe place or even pause your credit card account for a few months if you are concerned about overspending if you decide to keep it.
You can keep a credit card open if you rarely use it by adding a little monthly membership to your preferred magazine or streaming service. However, be sure to remember the credit card payment due date and make payments on time.
I would like to conclude here as I believe this suffices your query, “does closing a credit card affect credit score?” I hope this helps:)
Read More:
How Much Credit Score Required For Credit Card? How to get credit score with low CIBIL score? How To Rebuild My Credit Score?Your Feedback Matters! How was this Answer?
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Does Closing A Credit Card Affect Credit Score?
karishma
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2022-10-12T17:02:05+00:00 2022-10-12T17:02:08+00:00Comment
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