Credit card cancellation affect your CIBIL score !

The decision to cancel a credit card usually comes in mind when we want to avoid excessive spending or if the terms of the credit card are not friendly anymore but you have to make sure to do it in such a way that it gives the least damage to your CIBIL score.

Choose which credit card to cancel wisely:
If you are carrying multiple credit cards, always make sure, never to close all your credit cards at the same time. Your credit score may be badly reflected if you close too many cards at once, it may also hamper your chances of getting a credit card or a loan in the future. Credit card cancellation must go according to the terms of the banks exit policy or it will go on to reflect a very bad credit score. Try to compare the rewards and schemes the card gives, the interest rates and the other details and then choose which card will give the best advantage. Also, remember that is better to close the credit cards which have been attained recently than the older credit cards to avoid any dip in the credit score.

Pay off any pending balances:
The bank will cancel your credit card only if it does not have any pending balances due to the bank. Pay off the balances on the card in full, or transfer the balance to a balance transfer card if you have found one with better terms. If you don’t want any more dues till the time you pay off your earlier dues, you can get your card frozen till the time you clear the balance and close off your card. If you want to close your credit card accounts without impacting your credit score then you need to make sure that you have zero balances on your CIBIL report for all your active cards.

Keep checking your CIBIL score for updates:
When you close a credit card it reduces your credit limit, which eventually gets reflected in your credit score. Keep checking on your CIBIL report after you cancel your credit card. This will allow you to keep an eye on how much damage the cancellation of the credit card had on your credit score. The credit utilization ratio goes down after the cancellation of each of your cards, thus hurting your credit score temporarily. Also remember that is easier to improve your bad credit score than to fight off the huge debt traps of the dues on your credit card.

Credit card utilization is an important factor in determining your credit score so deal with it efficiently and effectively.
For Assistance regarding credit score optimization visit www.cibilconsultants.com

Source: Secondary