- Centurion Member
- Posts: 147
- Joined: Mon Nov 05, 2012 5:28 pm
- Location: boston
Cancelling a card impacts the score in two ways:
1) An immediate impact is in utilization. If you have outstanding balances reported (whether you pay in full or not after the statement is issued) part of your score is basically (all balances)/(all open credit lines). If you close a card, your utilization goes up which can decrease the score. This matters less if the CL on the card being closed is small (as is the case with yours) and/or the outstanding balances are small.
2) Average age of account. Closed accounts continue reporting for 10 years after closure, then drop off. So no immediate impact from this for 10 years, and by then you will probably have some older cards and it won't really matter.
People recommend not closing cards without good reason, mainly because of reason 1 above (and not understanding 2!). Good reasons can include an annual fee, a deposit you want returned, too much hassle to keep track of, or wanting to close a credit card with an issuer to get another better card from that issuer (some companies only allow you to have a certain number of cards with them, or a maximum credit limit on all their cards. Some allow you to do a change without closing one and applying for a new, but this depends on the issuer and the cards involved).