Does Cancelling a Credit Card Hurt Your Credit Score?
The longer you've had credit accounts, the better your score will be. Closing an account reduces the average age for your other credit accounts, unless your $300 card is fairly new(opened within the last 6 months) and you have other cards that have been open longer. Lastly, the credit score looks at "types of credit." It is good to have a well-rounded variety of credit, ranging from credit cards to store cards to auto loans to mortgages to personal loans. If this $300 card is your only credit card, then odds are your score will go down because you will not have another credit card to substantially replace the $300 one. So don't close the account…pay it off then leave it open. Unless it's one of those rip-off cards that charges and arma nd a leg in annual fees. Or unless you have tons of older credit cards with larger, better-established credit limits.
another When you cancel a credit card and close the account,it hurts you on 2 levels.
1) It decreases your credit limit. So with the same outstanding debt, your debt ratio is now higher. In layman terms, suppose you were using $2,500 out of a $10,000 limit (for a debt ratio of 25%) and you cancel a $2,500 card and close the account. You now owe $2,500 on a $7,500 limit and your debt ratio is now 33%. That is what hurts your credit
2) By closing the account, you delete part of your credit history. 15% of your score is based on how long you've held credit, so deleting part of your credit history keeps any eventual lender from having access to part of your credit history. The longer you've held the account you're considering closing, the more it can hurt you
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