Does cancelling credit cards hurt your credit scores?

Question

I have a regular visa credit card that I have paid in full. I have heard that cancelling the card will hurt your credit scores...is this true?
Also, I have a store credit card that is also paid in full. If I cancel this one will it hurt my scores as well?
I have been told to just cut the cards up and leave the credit lines open. Could someone please help me with this? Thank you!

Answer 1

**That "someone" who told you was absolutely right...
**Do a math, let us say:
--Card 1, limit $40 (for example)
--Card 2, limit $30
--Card 3, limit $30
**Total you have $100 for 100% debt free...you have $100 avaliable for you to use...
**If you cut off 2 of them, according to credit card co., you still able to spend $100.
**If you cancel your card 1 and card 2, you would only able to charge $30. With ratio they are looking at, your credit availibilities just droped big time...
**Think for yourself...

Answer 2

Here is why canceling cards can hurt your score, surprisingly. Your credit score, aside from on-time bill payments, is based on two other variables: your income to debt ratio and your debt to credit available ratio. In this case, if you cancel the cards, let's say each card is granting you at least a $5,000 credit limit, you are decreasing your available credit by almost $15,000 while your other debts stay the same. If on that last card you have it maxed out (which you say you don't, but for example), then yeah this would reflect badly. If though you can get rid of the balance on your fourth card, maybe even ask the card company to raise your limit if you're thinking of keeping it and you qualify, then slowly cancel the other 3 cards one at a time, this might put you in better shape. Still, the fact you had nearly 4 credit cards on your record is going to bite you a bit eventually, but credit does heal with time. If you haven't seen your credit report in a while, I would try making sure you have no credit card debt and cancel one of them. Then a month later, check your credit report (you can get a credit report for free once a year). See where it falls. Anything above 650 is considered a great score, so if you're above that, I'd think you'd be fine to get rid of the others too.

Answer 3

Credit scores are based on people being in Debt. No debt, no credit score. If, the cards not charge you an Annual Fee I would keep at least one active and use it very seldom, maybe by your Gas and then pay in full when the bill come. What I did when I had credit was when I buy Gas I put that much cash aside and when the bill come pay with what I would have use in cash had I not used the card.
I worked for a Real-estate company years ago and we had to have continuing education to keep our license active, or, that how it was then. A lady from a local bank came and explained Credit and how the bank looks at it for a loan. She said that a person who makes good money and pays cash would most likely not qualify for a loan because they really have no established credit history. A person in debit up to their neck who has kept all their bills paid would qualify quickly for a loan. So, no debt, no credit. It sounds weird but, this how a bank knows a person is a good credit risk, when they can manage their debt. A person paying cash, they can not determine they can actually handle debt and pay their bill.
I should add; if you have any other debt, such as, home/car. That will keep your credit history going and the Credit Cards are not needed. You just need some type debt. Hope you understand.

Answer 4

No it will not hurt your score to cancel a credit card. Credit cards are a risk to most lenders if you have other loans such as car loan or person loans as well as your credit cards. Sounds like your responsible though. It will not hurt your score to keep the Visa account opened with a zero balance either. I would say get rid of the store credit card because most likely that interest rate is 21%. Keep your visa balance paid in full each month and this will bring your score up..... Creditors look at history... they want to see a long payment history regardless of the account.

Answer 5

A reduction in credit line will not hurt your credit score. In some cases it could actually help. If you are tying to purchase a home, the mortgage company looks as your total available credit as a number to consider. If you have lots of credit cards with available balances, then the lendors see this a something you could possibly 'run up' after the loan from them is secured.

I would not 'cut up' the card and leave the account open. Close the accounts... you don't need to have some processing fee, non-activity fee or something like that creeping in.

Good luck and keep up the effort to be 'debt free'!

Answer 6

It would greatly depend upon the REST of your credit. If these are cards you've had open a long time (More than 2-4 years) or they are OLDER than your other accounts, you really dont want to close them-- it would actually shorten the average history of your accounts. If you MUST close somehting, choosing the most recent is always best.

Also, if you havea limited portfolio (just a few cc's and that's it) closing them would limit your abiility to create apositive history.

Also, utilization makes up to 30% of your score-- this is the balance to aviailable credit-- so closing two paid off cards could up your overall ratio if you have a balance on soething else.

You're better off keeping the balances at 0 and keeping them open.

Answer 7

The longer you have credit lines open, the better your scores. If you cancel you credit cards and have no other credit, it could hurt your score.

Answer 8

Well, it depends on how long you've had your credit cards. My mom told me to not open a credit line and then close it a month later because it will hurt my credit score. It's best to keep them open and establish credit with your credit card company's and make regualr payments on them every month. That's gonna help your credit score. I hope I helped you sweety!

Answer 9

it may actually help your credit scores to cancel them, the more cards you have, the higher the chance you could use them and go into debt, they look at it that way. You have the good credit history with the cards, cancelling them will nt hurt it.

Answer 10

Usually it doesn't hurt you credit score, especially if you have a few other lines of credit open. I would recommend leaving 3 lines open at a time.