Do you have one too many credit cards in your wallet or purse? Are there cards hidden away in your desk drawer never to be used again? Have you considered closing them entirely? Rather than close them, try to consolidate multiple cards into one card and preserve your total credit limit.
Your percent utilization, which is how much of your total credit you currently are using, is a component of your credit score. If you close a credit card, you reduce your total credit and increase your percent utilization – thus decreasing your credit score. While closing off cards may be good for other reasons, you can achieve those same goals by calling your issuer and asking them to consolidate your unwanted cards’ credit limits into the wanted cards.
Saves space, makes your credit more secure, gets rid of unnecessary credit cards and preserves your credit score.
Tags: Credit Cards, Credit Score
1 comment so far ↓
Yes, very true. I’m glad to hear you say this because I think a lot of people don’t realize this. They’ll apply for a card because of a promotion and figure they can just cancel it later, not realizing it will ding their score. Other people start having spending problems with the card and think they need to cancel it. Instead, like you said, consolidate it — or, if the card doesn’t have a balance but you’ve had it for a while, keep the account open but cut up the card, or alternatively, freeze it into a chunk of ice and keep it in your freezer. That way you are not tempted to use it but still have it in case of emergency, and still have the account open, helping your credit score.
Leave a Comment