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J. Warren
J. Warren, Attorney
Category: Business Law
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Experience:  Experience in general business transaction and formation matters.
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If I close several credit card accounts, will it hurt my credit

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If I close several credit card accounts, will it hurt my credit score? If it does, how long?
Hello! Thank you for your question today. My goal is to provide you with the information you seek.

Please note: (1) this is general information only, not legal advice; and (2) I will provide you with honest information and not necessarily to tell you might be hoping to hear.

Canceling several credit cards at one time could have a negative impact on a credit and how much it is lowered depends the balance owed compared to available credit ( limit). For example, a person has $10,000 of available credit and $3,000 represents the total outstanding balance. The person cancels several cards so that now available credit is down to $4,000 with a $3,000 outstanding balance. The ratio between available credit and outstanding balance (balance to limit) has now increased and therefore the credit score is lowered. The more the balance is equal to the limit the more impact it will have. 25-55 points.

Assuming now the person has the $10,000 available credit and no outstanding balance and then cancels several credit cards. It has a minimal impact if any on the score because of the heavy weight on a credit score is based on the balance to limits.

In general canceling is not necessary what lowers the score, it is the balance to limit and potential loss of payment history when those accounts fall of a credit report (they fall off on unused accounts after 10 years). Payment history and amount owed are weighted the most when a credit score is calculated.

A general rule of thumb is to keep your balance at about 30% of your available credit.

How long a credit score will take to raise after canceling cards really depends on the payment history and balances of any remaining accounts from that point forward. If payment history is good with all the other debt (payments made on time) the score will increase in a few months. If a person pays off the balance of a credit card every month a score could recover fairly quickly.

All my best & encouragement.

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All states have intricacies in their laws and any information given is simply information only and specifically is not intended to be, nor does it constitute, legal advice. This communication does not establish an attorney-client relationship with you.

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