Many people close their credit card accounts after becoming what seems like too delinquent to catch up. There seems to be the notion that closing delinquent card eases the situation. Not only is this not the case, closing out a delinquent credit card will hurt your credit more than it will help. Here are 5 credit cards that you should never close :- 1. Any credit card that still has a balance. When you close a credit card that has a balance, your total available credit is lowered. Since you still have a balance on that credit card, it looks like youâ??ve it maxed out. The amount of debt you have is 30% of your credit score; so a maxed out credit card, or one that appears to be maxed out, can have a very negative impact on your credit score. 2. Your only credit card with available credit. Closing out this card will decrease total available credit and increase your credit utilization, which, as before, is not a desired situation. Sponsored Links UNAUTHORIZED ADVERTISING REMOVED BY MODERATOR 3. Your only credit card. Since part of your credit score into consideration the different types of credit you have, keeping a credit card in the mix will add points to your credit score. You could get turned down for a credit card in the future because the creditor will think you donâ??t have enough experience with credit cards. You could see a drop in your credit score if you close out your oldest one. 4. Your oldest credit card account. Closing out your old credit cards shortens your credit history. Lenders tend to view borrowers with short credit histories as riskier than borrowers with longer histories. 5. The credit card with the best terms. Why let a good thing go? If you have a credit card that has a low interest rate, no annual fee, and other perks like travel insurance, keep it. A credit card that charges you less for making purchases is far better than one that charges you more. Itâ??s ok to close out a newer credit card that you no longer use as long as the card does not have a balance and you have other credit cards. In identity theft and fraud situations, your creditors will advise you to close the credit card to keep the thief from damaging your credit even further. The proper way to close a credit card is by sending a written notice to the card issuer. For your records, you should request written confirmation that the account was closed in good standing. You should be just as selective about the credit cards you close as the ones you open. Before you pick up the phone to alert your creditor that you want to close your account, make sure itâ??s not going to affect your credit score in a negative way. See What Your Credit Score Is Made Of to learn how your credit score is calculated.
Well said! If you aren't using the card, that doesn't mean you should close the account; in fact, doing so can hurt your credit score (the score that tells companies whether you are a good candidate to loan money to). These companies, when they look at your credit report, want to see a few things: > Do you have a history of credit being extended to you? They want to see a long history, which is why you should NEVER close the account for the credit card you've had the longest, even if you never plan to use it again, unless it charges an annual fee > How much of your credit do you use? They like to see that you use no more than around 30% of the credit available to you.
