Things you should consider before closing a credit card – Times when its better to leave a credit card open
Many of us are often faced with a situation when we want to cancel one of credit cards. We wanted with simply because we want to remove the butter in a financial lives and do not want to manage more credit cards and a have too. We come across better credit card offers all the time and may want to throw out the old redundant ones that we do not use any more. However it is also an established fact that closing a credit card account does have an impact on your credit score of a person. Any situations it may be wiser to just put away the credit card accounts that you are not using instead of cancelling it. You are a few things in a nutshell but you must consider before you decide to close and open and paid credit card account.
· You should consider leaving your credit card open and if it is your only credit card. A credit card that is paid it has no balance and is your only credit card should never be closed. Using a credit card moderately and responsibly is the best way and the easiest way to have positive data reported on to your credit report. Apart from that everyone should have at least one credit card for emergency use. You never know when you might need that additional credit.
· It’s the only credit card that has available limit. If it is the only credit card that has available limit for the other credit cards or maxed out and you must not close credit card account as you might find some need for it. Also having a credit card accounts that is not maxed out like the rest of the credit cards will tend to counter some of the negative effects that your other maxed out credit cards must be having on your credit score.
· If the credit card that you’re considering to close is one of your oldest credit cards then he should think about not closing it. This is because the length of the credit history of a consumer is a factor that is considered in the credit score calculation and counts for about 15% of the total credit score. Cancelling our credit card accounts that is one of your oldest credit accounts will shorten your credit history and have a negative impact on your credit score. Eckstein
· If the credit card has better terms and conditions then some of your other credit cards and you might consider retaining this card and using it instead of the other credit cards that offer you less favorable terms.
· If closing a credit card is going to raise your credit utilization to significantly more than 30% when you should consider not closing that credit card account. High credit utilization is the second most important factor used in calculating the credit score a person and accounts for 30% of the total credit score. Just putting the credit card away somewhere secure do you cannot use it and maintaining your credit utilization to around 30% may be worth the benefit to keep the extra credit card account active.