Financial Freedom

Does Closing a Credit Card Account Affect Your Credit Score

This post may contain affiliate links and/or it may have been a partnership. Please view our policy page for more details.

Boosting your credit rating can be a challenging task. Since financial extremists and the majority of blogs label all loans and credit cards as wicked, you may get tempted to shut down all your credit cards for the sake of improving your score. It isn’t as cut and dry as you may imagine, and you may end up harming your ratings by choosing to shut down any of your accounts. 

Does closing out a credit card account after your credit score? Read here to find out the answer and what you should do.

What happens to your credit score when you close your account?

Credit cards affect an individual’s credit in various ways. For an extended period, your credit rating is partly decided by the age of all of the current credit profiles that you own. So, if you analyze all of the credit cards listed on your credit record, you can equate how long each account has been active.

The older the account, the greater the score is in this section.15% of your ratings rely on the age of your accounts. This is a comfortable section to score well in since it does not depend on any other financial choices you make. Make sure to take the time to collect a solid credit background.

As a result, when you dismiss a credit card, you limit the number of accounts employed in calculating the credit score. However, closing an account doesn’t happen instantly and the account ages for a decade after it’s been shut down. Then it eventually drops off your credit records once the period ends. Also, remember that you may find a site to profit from if you have a good credit history.

Another way your score is affected by closing your card is through your credit usage ratio. For instance, if you owe $4,000 on a credit card and own three distinct cards with loan limits equaling $20,000, this means your credit usage ratio is 20%. However, if you close one of the accounts that possess a $6,000 credit limit, you reduce your overall credit down to $14,000.

If you redo the math, the utilization rate shoots up to 28.5%. Owning a more extensive credit usage affects your score and also sends warning signals to financial institutions about your remaining credit balance.

How many credit cards should one own?

The number of cards you own depends on how you manage the accounts. Maintain low or zero balances on your cards individually matched to your overall limits and revenue. If you take this into consideration, owning several cards should not strain your credit or the possibility of getting a mortgage or loan.

Owning numerous cards decreases your credit usage ratio since there is more credit at your disposal. This is only good for your credit ratings if you do not charge up the cards too often. Nonetheless, if you open numerous accounts in a short period, your score is highly likely to decrease. 

Bear in mind that fresh credit accounts for 10% of the credit score. It is also not a good idea to overload the number of credit cards in your possession, particularly when you have zero installment loans. Another 10% depends on this.

With close to 35% of your credit ratings impacted by how you utilize your accounts, there is room for growth regardless of your current score. Before you make any decisions concerning credit cards, have in mind the impact your decisions can have on your account.

2 Comments

  1. Shara January 8, 2020
    • Sharing Life's Moments January 8, 2020

Leave a Reply

CommentLuv badge

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Being a wife to a hard-working man has some challenges of its own. Do you feel this pain points too in your life?
Being A Wife To A Hard Working Man

My husband wakes up at 3:30 AM for work, while our...

Choosing a nursery is one of the biggest decisions you'll make for your kids. Here is some advice on helping you decide the right one. #parentingtips #parenting #parentingadvice
Advice for Parents Choosing a Nursery

When the time comes for you to start choosing a nursery...

Learning to live in the moment is a skill that many don't have yet. This skill alone is a positive life-changer. Learn more here.
4 Tips To Live in the Moment

You’ve heard the common phrase, it’s important to be present at...

My journey to self-discovery has been quite a ride. There are several parts to it. What has your journey been like? #selfdiscovery #lifejourney #lifeimprovement
Journey of Self-Discovery

I watched the movie Nappily Ever After on Netflix and it...

By using these budget ideas for lazy people you'll get yourself on track to saving money and even earning more of it. #budgeting #savingmoney #budget #moneymanagement
Budget Ideas for Lazy People

A budget is a necessary evil, even for lazy people. If...

Use these seven tips to help you manage your money during the holidays. Which of these money management tips are you using? #moneymanagement #money #holidaybudget #savemoney #sharinglifesmoments
7 Tips To Help You Manage Your Money During the Holidays

Managing your budget during the holidays can be a challenge. More...

Knowing the principles of personal financial management will help you to have financial freedom faster. These simple tips will help you get started.
The Principles Of Personal Financial Management

Being able to manage one’s finances should be incredibly simple; but...

Student loan debt affects so many people in the US. Here are five tips for clearing student loan debts quickly.
5 Tips For Clearing Student Loan Debts Quickly

So many people leave college with a mountain of debt and...

Here is some helpful advice from the experts on how you can start protecting the foundations of your building.
Top Tips for Protecting the Foundations of Your Building

Over time, poor drainage, tree roots, and soil shrinkage can all...

Be sure to explore the various kinds of furniture out there. Here are some features in design a sectional sofa that you might want.
Design Features to Look for in a Sectional Sofa

When buying furniture, it’s always a good idea to know what...

Keep your house comfortable with these climate control tips. Which of these climate control tips are you using?
Stay Comfortable with These Climate Control Tips

When the weather is at its most extreme it can be...

Electrical Problems Won't Slow Life Down for Long If You Follow These Three Tips to save yourself time and money.
Electrical Problems Won’t Slow Life Down for Long If You Follow These Three Tips

Energy drives almost everything we use in our daily lives, from...

Juggling everything can be a challenge. Read these tips to pull off working at home, parenting, and marriage.
Tips to Pull off Working at Home, Parenting, and Marriage

Working from home can be a liberating experience, especially if you...

Make sure that you check out these business books for entrepreneurs to help you gain the right business mindset and tools for success. #entrepreneurs #mindset #businesssuccess
Top Business Books for Entrepreneurs: Part 2

I’ve got a huge list of business books for entrepreneurs lined...

Transform your life with these top books for entrepreneurs this year. These books will help you have life-changing experiences.
Top Books for Entrepreneurs: Part 1

As an entrepreneur who has been working independently off and on...

Here are some tips on how to make money letting a property. These tips are going to help you make more money.
How to Make Money Letting a Property

Putting your savings into property is a great way to invest....

Enter to win the Christmas Jars amazing family friendly movie in this giveaway. #ChristmasJarsL3 #giveaway
Christmas Jars Movie And Giveaway

There some family-friendly movies that are well worth watching. Zeva and...

Prepare to be moved by another Kendrick Brothers' movie, OVERCOMER this weekend August 23, 2019. Get your movie tickets now! #overcomermovie #Flyby #ad
OVERCOMER Movie Thoughts

I’ve been a fan of the Kendrick Brothers Production movies since...

Get your family ready to watch the UGLYDOLLS family movie this weekend. Learn more about it here!
UGLYDOLLS Family Movie May Change Society

We live in a society where a person’s appearance is one...

DUMBO movie is coming to life. Learn more about this movie and a bit of information about myself here.
DUMBO New Edition Releases Soon

One of my favorite movies growing up was DUMBO. I was...

shares