Does Canceling a Credit Card Hurt Your Credit Score?

If you’re in the market for a new vehicle in St. Louis, you may be spending some time strengthening your credit score to secure a better interest rate on a car loan. Are you wondering, “does canceling a credit card hurt your credit score?” In short, yes, but not irreparably. So, how much does canceling a credit card hurt your credit score? What options do you have other than to cancel your card? Read on below for the answers to these questions, and contact us for more finance help!


How Much Does Canceling a Credit Card Hurt Your Credit Score?

You may be considering canceling your cards for a number of reasons. If you feel you no longer need the credit card because you don’t use it, don’t need it, or can’t trust yourself with it, how much does canceling a credit card hurt your credit score? This amount is heavily dependent on the credit card’s credit limit. Canceling your credit cards with the highest credit limits could possibly do the most damage. Why?

  • Your credit score is largely determined by credit utilization
  • Credit utilization is the ratio of your spending to your credit limit
  • This number is calculated per individual card and overall amongst all your credit cards
  • Experts recommend that you use less than 30% of your available credit limit to preserve your credit score
  • To summarize the above statements: Cancelling a credit card with a high credit limit affects the credit utilization ratio, and thus hurts your credit score

Alternatives to Canceling Your Credit Card

Rather than canceling a card you don’t use much or don’t enjoy the rewards from, there are other ways to utilize it rather than suffering the temporary blow to your credit. Here are some recommendations to keep your credit high instead of canceling:

  • Call the issuer and ask them to extend the credit limit
  • Put a small, recurring charge on autopay, like a subscription service
  • Continue to use the card, because the older the credit card, the better

Get More Credit Help From Green Light Auto Credit

Does canceling a credit card hurt your credit score? Unfortunately, yes. But here at Green Light Auto Credit, we are committed to helping Herculaneum and Florissant-area drivers like you raise their credit and get a car they love. Contact us today for more tips to increase your credit and other car finance inquiries you may have!

Happy customer of Green Light Auto Credit