Comments on: How Cancelling a Credit Card Affects your Credit Score

By: Denny

Denny — Sat, 12 Sep 2009 06:10:51 +0000

Thanks this was very helpful information.

By: JC

JC — Mon, 04 May 2009 14:32:14 +0000

I have a TD GM visa, which is pretty much useless to me, as I never plan on buying a GM vehicle (and neither does anyone in my immediate family).

I was considering cancelling the card, but I’m also interested in applying for the cash-back TD visa.

Can I simply transfer (since they’re both TD cards)? Or do I have to cancel the GM card and apply for the cash-back card afterwards? I don’t care too much about my points, I’m just wondering how all this will affect my credit.

By: How to Improve Your Credit Score | Million Dollar Journey

How to Improve Your Credit Score | Million Dollar Journey — Mon, 07 Jul 2008 09:31:06 +0000

[...] cancelling credit cards, avoid cancelling the ones with the longer track [...]

By: MAC

MAC — Wed, 07 May 2008 20:18:40 +0000

is there a free canadian site to get your personal creidt score?

By: This and That

This and That — Fri, 21 Dec 2007 13:44:18 +0000

[...] Million Dollar Journey finds out how canceling a credit card affects your credit score. [...]

By: canadian dollars

canadian dollars — Wed, 19 Dec 2007 01:36:37 +0000

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By: ThickenMyWallet

ThickenMyWallet — Tue, 18 Dec 2007 20:33:01 +0000

Thanks for the mention. The best option for an old credit card is to run one bill a month on it and pay it promptly. Set up an automatic charge so you don’t think about it. It keeps the credit history current and, if you pay on time, shows good credit history.

By: Diva

Diva — Tue, 18 Dec 2007 20:11:03 +0000

Reducing credit limit does affect your credit score if you have a balance owing.

The reason is that part of your score is a factor of how maxed out you are. If you have a 20k limit and owe 5k then you are using 25% of your potential credit.

If you reduce that limit to 10k now you are using 50% of your potential credit.

By: FrugalTrader

FrugalTrader — Tue, 18 Dec 2007 19:09:38 +0000

Jimmy, to my understanding, reducing credit limit will not affect your credit score.

Calvin, it really depends on your credit history. Is that credit card the oldest of all your credit cards? Besides, credit history only makes up 15% of your credit score, and a few months should heal any wounds that canceling a credit card would inflict.

Trevor, i’ve read that you should keep your credit card balance at less than 50% of the credit limit. So to answer your question, use your $25k card and only spend up to half.

By: Trevor

Trevor — Tue, 18 Dec 2007 18:36:55 +0000

Another question. First off, I would like to say I never pay credit card interest. Pay in full every month. So I am wondering if it is better to have a credit card with a high limit (say 25k) and use only a small part of it or one with a low limit (say 5k) and have it almost maxed every month.

Thanks!

By: Calvin

Calvin — Tue, 18 Dec 2007 16:09:53 +0000

Good question Jimmy… I’m also interested in an answer on that one.

I recently cancelled a Citi Mastercard that I have not used in a while. The account had been open for a few years, but I have not used the card for months… wonder whether that will have much of an impact.

By: Jimmy

Jimmy — Tue, 18 Dec 2007 15:40:20 +0000

What about reducing the credit limit on an old credit card? Does that have any effect?

By: The Financial Blogger

The Financial Blogger — Tue, 18 Dec 2007 12:02:08 +0000

Traciatim,
I think I did not make my point clear enough. I wanted to say that if you open all those credit account, your credit score will drop.

However, if you just open one mortgage and you went to 4 different institution within a limited period of time, it is true that credit reporting agencies will count only 1 inquiry.

People have tried to apply for more than one car loan in the same day and then, take all of them. They have no updated the credit inquiries system to make it live and to penalize individual who would open more than one credit account at the same time to avoid this kind of situation.

By: Traciatim

Traciatim — Tue, 18 Dec 2007 11:43:47 +0000

I was under the impression that the credit score calculation was changed to allow for ’shopping’ of credit. This would mean that multiple inquiries for the same type of credit (IE, You get 4 quotes for a Mortgage or Car Loan) would only effect your credit as one inquiry would so as not to make the 4th person deny you if you were walking a fine line.

I can’t remember where I read it, but I think it was one one of those ‘top 10 myth’ lists somewhere.

By: The Financial Blogger

The Financial Blogger — Tue, 18 Dec 2007 11:25:34 +0000

Thx for the double mention ;-)