Ever wonder what’s the best way to cancel credit cards in order to minimize the impact on your credit score? I found some resource on a few sites and here I’ve summarized the step-by-step process to do it.
What You Need To Know About Credit Score
A credit score is a numerical expression that represents the creditworthiness of that person. When you ask for a loan for rent an apartment, buy a house and a car, pay utility bills, banks and credit card companies ask you the credit card information in order to evaluate the potential risk losses due to bad debt.
Image credit: Chelsea Dagger
If your credit limit is to $10,000, and your debt to $10k, it can be a trouble for your credit score. The FICO model, can tell you how to manage credit, if you want more information about the components of your credit score, check out myFICO.
One thing is possible to do, is to share balances across multiple cards. For sample, if you have two cards with a $5,000 credit limit, and one is maxed out, and one has no balance, it would be in your favor to transfer half the balance to the empty card.
Pros Of Closing A Credit Card
The length of credit history, establishes the weight your credit card. If you have more than one credit card, and you want to close one, is better consider those with a short credit history.
There are several positive aspects on closing of the unused cards:
- Reduces the risk of identity theft.
- Reduces your bookkeeping.
- Prevents you from abusing them.
- Puts you in control of your finances.
What You Need To Check First To Closing A Credit Card Account
If you decide to cancel a credit card account, you need to take time and organization. Before you start cutting up the cards, follow these easy advices:
- If you have open more than one card account, make sure to close them, one at a time, and first, cancel card that charge you more fees.
- How I said before, your score depends from the age of your account. If you must choose which credit card close, Cancel new cards before old cards.
- Keep credit card that offer good rewards programs.
- keep the account open until your balance is zero.
- First to cancel an account, pay down your balance in full. I’ve read of lender that raised interest rates on the outstanding balance.
Once, checked out these simple points, you are ready to start.
How To Closing A Credit Account, Step By Step.
To begin the process of closing the account, you need to:
1) Contact your bank to cancel the account. In this step it is important to confirming that your credit card balance is zero.
2) Send a short letter of confirmation for cancel your credit card. It should include your name, address, phone, credit card number and account number. If you want a sample credit card cancellation go at the Dolans.
4) Be patience. After several weeks you should receive confirmation that the card has been cancelled.
To summarize, I think it is right to cancel your credit card if you have problems with excessive fees. While, if you think it is important fo you, then, keep your account open.
