Closing Credit Cards without Damage to Your Credit Score

Sooner or later every credit card holder faces a problem of closing their credit cards. Why a problem? Because each self-respecting card issuer will not be slack at reminding you that closing your account will damage your credit score. Is it really so, or banks just use this trick to keep their clients? Let's get to the bottom of the question.

Why would you want to close one of your cards? Maybe you decided to apply for a more favorable deal with better terms, or your financial situation grew worse and your current card's interests and fees got unaffordable for you to pay. Or maybe your introductory period is over and you want to get a balance transfer card, or after all, you wish to empty your wallet of too much plastic.

So, you have made up your mind to close one of your credit card accounts. Let's figure out what it can result in for your credit history and available credit.

Available credit is the amount of money you have on all your credit cards. It can be easily calculated. You just need to total the sum of your credit limits and subtract the amount of money owe. Closing a card will cut down your overall credit line. But your debt remains the same.

When a credit bureau finds out about your account's closing, they do the same operations with your limits and balances and reflect it in your credit history. That is how closing a credit card affects your credit score. Your credit rating, therefore, decreases.

However, having too many credit cards can also afflict your credit report. This means you are to strike a happy medium in your cards' amount matters.

But let's get back to closing credit cards. What are the main rules you are to stick to if you do not want to damage your credit history?

The 4 "C" Rules When Closing a Credit Card

- Close the card you have most recently got. Try to keep the cards you have been using for a long time. This will have a milder impact on your credit rating.

- Choose the card with the smallest credit limit to close. This will also be better for your credit history.

- Combine all your credit limits. This will work out especially well in case you have several offers from the same bank. You might have some problems with combining such cards as a business credit card and a consumer plastic, though. But, as a rule, you reach an agreement in the process of negotiating with your bank.

- Credit limit increase will be a perfect way out. Just contact your bank and ask them to extend your credit line. If you are in good standing with your card issuer, your request will most likely be complied.

These tips will help you out when you decide to close a credit card. Following these rules will prevent your credit score from damaging. And, having got rid of the card you do not need, you will get access to the best credit card deals.