How to Cancel Credit Cards Without Negative Effects

Moderate use and immediate repayment on a credit card can help your score.
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You might be thinking about canceling your credit cards as a way to eliminate the temptation to use them. Maybe you think it will help your credit score to close these accounts. But canceling your credit cards can actually hurt your scores because of the way the score is calculated. These risks are hard to eliminate, but you can mitigate the damage with an effective strategy.

The Newer the Better

Canceling a newer credit card impacts your score less than canceling an older card. The average age of your credit accounts affects 15 percent of your FICO score, according to Bankrate. FICO is the scoring model used by the three major U.S. credit reporting bureaus. When you cancel an older card, you significantly cut into the average length of credit. Canceling a newer card won't have the same effect, because you haven't built an extended history with it.

Account Mix and Utilization

Your credit utilization ratio and credit account mix are additional factors to consider before canceling. The utilization ratio is the percentage of your available credit that you're using. Canceling a credit card with a high limit can lead to a sharp increase in your overall credit utilization ratio. This ratio contributes to the "Amounts Owed" FICO category, which Bankrate states has a 30 percent impact on your score. Also, you take a hit on the "Types of Credit Used" category if you cancel your only credit card, and this affects 10 percent of your score.