You should review your credit history before you close a credit line. Also, consider how the closure will affect it. You can obtain your credit score for free from many issuers by simply requesting it. There are also numerous websites that offer free credit scores. Although the scores are not as accurate as FICO scores they can give you a good idea about your credit standing.
Inactive or rarely used credit cards should be closed
Credit cards are an important tool in your financial planning, but they can become unusable at times. They may have high annual fees or high interest rates. Or they might offer rewards that aren't sufficient. Whatever the reason, it's important to understand how closing them will affect your credit score, and how to handle the change.
Closing a credit card account can lower your FICO Score. It is a smart decision to consider whether closing an account that is inactive or not used frequently is in your best interest. While closing an inactive credit card won't make your credit score better, it can decrease the temptation to make unnecessary fees.
Inactive or rarely used credit cards should be closed. You need to find a more efficient method of using the account. If the card is not used often, you might consider opening an online shopping bank. You can make small purchases over the course of a few months, and then pay them off in your next billing cycle. This strategy will help keep your credit limit at a high level while demonstrating responsible credit usage.
Cancel cards with outstanding balance
The first step to cancel credit card accounts with an outstanding balance is to contact the credit-card issuer. Your account should be cancelled by customer service. Before closing your account, make sure that you have verified that there is no balance. Otherwise, you may find residual interest accruing on the account. A closing of an account could take significant time and effort.
It may take several months for credit reports to reflect the cancellation. No matter how you cancel a credit card, it is important that you receive written confirmation from the issuer. You will be able to track the time your account was closed. You could be charged additional fees if you don't.
If you aren’t sure whether to cancel a creditcard with an outstanding balance, consult a financial professional. For creditors who are unable to make their payments, it may be a good idea to cancel a card that has a balance.
Cancel cards with low balances before closing
Make sure you contact your credit card provider before closing your credit card account. It is necessary to notify your credit card provider of your intention to cancel the account. If you don't, residual interest will begin accruing after your final bill. Contact them to inquire about a higher rate or reward program.
Contact your credit card issuer for confirmation that your account balance is $0 to cancel it. After you close the account, check your credit score between 30-60 days. It should say that you have closed the account, and that there is no balance. If it still shows $0, you need to file a dispute to remove it from your credit reports.
You may need to close your joint credit card if you are going through a divorce. This will ensure that you don't make regrettable purchases. A joint credit card can be used to help you pay off other debts if you are trying to manage debt.