Does Closing A Credit Card Hurt Your Credit Score – And Other Questions
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You might be thinking to yourself, does closing a credit card hurt your credit score? The short answer is a definitive, yes! Although, you may have been advised by a lender that closing a credit card can help your FICO score, that answer is just plain wrong. In fact it is one of the things that hurt your credit score when done at the wrong time.
The reason it can hurt your credit score is because you are reducing your debt to credit ratio when you close down a card. Your credit score is based on available credit and what you are using and the length of time you have had a credit history. Closing down old cards makes your credit history look newer and your available credit less.
Here are some other questions you may have with respect to things that hurt your credit score. Does checking your credit hurt your credit score? The answer is no. It is the application for a new credit card that can sometimes have a negative influence on your credit score.
Does credit counseling hurt your credit score? The answer here is also no. The past three years at Fair, Isaac, the company in charge of the FICO scoring system, has ignored any references to credit counseling that may exist in your current credit file. You might still have some difficulties getting a new loan if you’re seeking credit counseling and not paying your bills on time.
Do balance transfers hurt your credit score? If done judiciously it should not have much of a long-term effect on your credit score. Actually, it is not the balance transfer that affects your score but the inquiry that is placed on your credit report when you apply for a new card.
Does debt consolidation hurt your credit score? If you work with a reputable company, debt consolidation on its face should not negatively affect your score. However, it is important to consider when each card is paid off whether or not it should be closed. The older cards that you have provide you with a long credit history so those cards should be kept open. If you choose to close newer accounts then make sure to write the company saying the owner closes the card at his/her request.
So now that we have discussed what can hurt your credit score, hopefully you feel more secure in making these decisions without fear. Remember though, seek advice from many different sources to verify any type of financial decisions you make so that you have cast a wide net of opinions from individuals you trust.
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