More than one-quarter of people surveyed thought that canceling a credit card would improve their credit score. I’m guessing that the thinking behind this is as follows:
- If I cancel my account, then I can’t use the credit card
- If I don’t use the credit card, then I can’t accrue more debt
- Moreover, I won’t potentially make late payments because I won’t owe anything
- Therefore, it’s better for my credit to cancel the card
It’s certainly true that having no card is better than having a card you run up a high balance on and then pay late. However, canceling the card altogether isn’t your best course of action. It can decrease your credit score. Instead, just put those cards out of reach, avoiding the problems without compromising your credit.
Notably, if you don’t use your card for a long period of time, then the credit card company might cancel it or reduce your available credit. This isn’t great for you either. Therefore, you should pull the card out periodically, charge something inexpensive on it, and immediately pay it off.