ScoreSense: Cancellation of Credit Cards

When you follow suggestions from ScoreSense, cancellation procedures for credit cards are much clearer.  There is a right way and wrong way to, according to ScoreSense, cancel credit cards.  When you know how to do so properly, cancelling will typically not hurt your credit worthiness at all.  Score Sense is a credit monitoring service that gives you access to your credit reports and scores, and alerts you to potential identity and credit theft.  By signing up with ScoreSense, fraud can be avoided and your credit scores improved.

To ScoreSense, cancellation of credit cards can be accomplished typically without affecting your credit scores.  There are many good reasons to cancel a credit card, including wanting to reduce debt, getting your financial house in order, and eliminating unnecessary annual renewal fees.  But while having too many credit card accounts can hurt your credit score, having only a few and cancelling one the wrong way can affect your score as well.

When timed properly, according to ScoreSense, cancellation of a credit card can be positive.  One example is when you open up a new credit line to take advantage of a special transfer deal or lower annual interest rate.  By transferring the balance to a new card and then cancelling the old one, your credit report will show a closed account with a zero balance and no negative feedback, providing a positive reference for your credit profile.  Your total utilization ratio (outstanding debt divided by the combined credit limit of your cards) will also not go up because you have not borrowed any more money.  As long as it stays below 30 percent, your credit score won’t go down.

There are also times when you should not cancel a credit card, says ScoreSense.  Cancellation of a credit card with a zero balance can be detrimental if the remaining cards are carrying a balance, because your utilization ratio goes up.  For example, if you have three credit cards with a limit of $1500 each, and you owe a total of $1000, your utilization ratio is 22 percent ($1000 divided by $4500).  However, if one of those cards has a zero balance, and you cancel it, you still owe $1000, but now your credit limit is only $3000, increasing your utilization ratio to 33 percent ($1000 divided by $3000).

When you follow the procedure outlined by ScoreSense, cancellation typically will not hurt your score.  First, you must have a zero balance on the card.  Next, call the customer service phone number, verify the zero balance, and then, following the outline by ScoreSense, cancel the card.  Follow that up with a letter to the issuer stating that you closed the account, and reference the date, time, and rep you talked with.  Finally, check your credit report to verify the closure.

When you sign up with ScoreSense, fraud alerts are available to you so you’ll know if someone tries to open a new account in your name.  ScoreSense also has everything you need to know about proper cancellation of credit cards.  They can help you improve your credit score and avoid identity theft.

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