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 many websites that provide free credit scores. Although the scores are not as accurate as FICO scores they can give you a good idea about your credit standing.
Close down inactive or infrequently used credit cards
While credit cards can serve as a financial tool, sometimes they need to be stopped. There may be high annual fees, high interest rate, or rewards that simply aren’t enough. No matter the reason, it is important to understand how closing them can affect your credit score and how you can handle it.
A credit card account that is closed can affect 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. Although it won't increase your credit score or reduce the temptation to make excessive charges, closing an inactive account can help you lessen that temptation.
To close down an inactive or infrequently used credit card, you should first look for a more effective way to use the account. Open an online shopping account with the card that is infrequently used. 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
First, contact the credit card company to cancel credit cards with outstanding balances. Customer service representatives should be able cancel your account. Before closing your account, make sure that you have verified that there is no balance. You may also find residual interest on your account. You may also need to spend a lot of time and effort closing your account.
Your credit report can take many months to reflect the cancellation. No matter how the card was cancelled, be sure to get a written confirmation. You will be able to track the time your account was closed. A failure to do so could result in additional charges.
It is best to consult a financial advisor if you aren't sure if you should cancel a credit card with an outstanding balance. If a creditor is unable to pay the monthly payments, sometimes canceling a card with an outstanding balance may be the best option.
Cancel cards that have a low balance prior to closing
Make sure you contact your credit card provider before closing your credit card account. You'll need tell your credit card provider you would like to cancel the card and confirm that there's no balance. Otherwise, residual interests will begin accruing after payment is made. You may also need to contact them to inquire about a new rate or reward program.
Contact the credit card issuer to cancel your credit card account. After cancelling the account, you should check your credit report within 30 to 45 days. It should state that you have closed your account and that the remaining balance is $0. However, if it is still listed, you will need a dispute with the credit agencies to have the balance removed from credit reports.
You may need to close your joint credit card if you are going through a divorce. This will prevent you from regretting later purchases. You can also close a joint credit line if you're trying to manage your debts. This will allow you more time to pay off other debts.