Does Closing a Credit Card Affect Credit Score? Know the Truth
Does Closing a Credit Card Affect Credit Score – In today’s time where credit cards are becoming increasingly common, no one wants to spoil their credit card score. In such a situation, people with such wisdom take decisions so that their credit card score does not get spoiled.
In such a situation, many times a decision taken without information puts you in unnecessary trouble, and one of these is closing your old credit card, which can spoil your CIBIL score.
Let us know in today’s post what happens to you on closing your old credit card and how it has a big impact on your credit history. And how to avoid it.
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After all, why is it harmful to close your old credit card?
By closing the old credit card, the limit of your current credit card gets reduced and by increasing it, your credit utilization ration increases substantially.
By doing so, your credit card history gets reduced which weakens your financial profile.
In such a case, you will have to reduce your expenses because in such a case, if you use the card excessively, your credit card score can also decrease.
In such a case, you should always keep in mind that you should use only 30%-40% of your card’s limit. This means that if your credit card limit is 1 lakh, then you should use only 30,000 to 40,000 rupees. By doing this, your credit score keeps improving.
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Why does the credit card score fall?
The biggest reason for this is that when you close your old credit card, then at that time your credit score comes down considerably. And in such a case, when you close the old credit card and take a new credit card, then the banks do not feel that your financial situation is stable, so in such a case they bring down your credit score.
In such a situation, our advice to you is that if you have any non-essential credit card, then pay it on time and avoid closing it. You may want to reduce the use of this credit card but do not close your credit card. Yes, if you do not want to use the credit card further, then you have no problem in closing this card.
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10 FAQs about Does Closing a Credit Card Affect Credit Score?
When is the right time to close a credit card?
If you want to close a credit card, close it only when it is new and the work has been done, doing so has very little impact on your credit score.
Does closing an old credit card affect your CIBIL score?
Yes, doing so can affect your credit card score, especially when your transaction record has been good for a long time.
Does having more than one credit card improve your score?
Yes, if you use your cards properly and clear your payments on time, your credit score can improve.
If we use our credit card less, should we keep that card?
If you want, you can use your credit card less so that it remains active and your credit history remains better.
Which thing has the most impact on credit card score?
Paying charges on time and having a long term credit history has a huge impact on your card.
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Is there any difference between closing your credit card yourself and closing it through the bank?
Yes, if you close your credit card yourself then the impact on your credit score is minimal whereas if your bank closes your credit card then the impact on your credit score is significant.
I do not use my credit card but an annual fee is being charged on it, what should I do in such a case?
If you wish, you can close your credit card but you must check your credit history and also keep in mind that after this it will be a bit difficult for you to get a credit card again.
If the credit card remains inactive, does the bank close it itself?
Yes, if you do not use your credit card for 12 months then your bank can close your credit card.
In how much time can the credit score be improved?
To improve your credit score, you should make your payments on time and by doing so you can improve your credit score in 3-6 months.
Does using a credit card increase your credit score?
Yes, if you use your credit card properly and clear the payments on time then your credit score can be improved in this case.
We hope you get information about “Does Closing a Credit Card Affect Credit Score” in our article, please do share, thanks.
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