subject: How Cancelling Credit Cards Can Affect Your Score [print this page] There are numerous tips given freely to assist others on the struggle to credit repair. One such suggestion is to immediately perform "plastic surgery" and cut up your credit cards. While cancelling a credit card can have beneficial results, you may want to learn more about its effects on your credit score - before you reach for the scissors.
As with most financial decisions, there is no black-and-white. There are both positive and negative effects with any decision, oft times graying the areas between the past and the future. Whatever the consequences, knowing what they are will be your first step in procedure.
Cancelling credit cards may sustain even heavier damage to your credit score, dependent upon when the accounts were first opened. If they were your first accounts, cancelling them would mean cancelling all of your positive credit history. Your credit age is all part of the mix that goes into calculating your FICO score, and reducing your age will also reduce your score.
The ratio of your revolving credit diminishes when you cancel credit cards. This in turn hurts your FICO score by having a less-diversified credit mix. In all fairness this short-term loss should be weighed against the long-term consequences of diminishing your revolving credit.
Decreasing your revolving loans can also be beneficial in credit repair. Despite the immediate blow to your credit, in the long-term having less revolving credit might be positive. Likewise, there are other positive effects of cancelling credit cards.
Another diminishment of cancelling credit cards includes the revolving loans in your credit mix. This gives you a less diverse credit mix, which again lowers your credit score. While this lower ratio hurts your FICO score in the short run, it may actually help in the future.
Cancelling your credit cards may be an issue of removing your temptation. If so, cancelling credit cards would mean avoiding an unnecessary ocean of debt and do wonders in credit repair. If you don't have the credit cards, you can't use them.
If this sounds appealing to you, you will like another effect cancellation will have. By cancelling your credit cards, you also lower your over-all credit limit. While some may find this an annoying inconvenience, if you are having trouble with financial self-restraint this will be a blessing in disguise.
