Should I Cancel My Credit Cards To Improve My Credit Score?

Your credit score reflects a number of factors - not just whether you are late on payments. Creditors look at how much credit you have in proportion to your debt. So, for instance, if you have 4 credit cards with a credit line of $10,000 on each, your credit line equals $40,000. If you have $5,000 of debt on each one, you owe 50% of your total credit line. If you decide to cancel two cards and consolidate the remaining balance on the other two cards, you would now have $20,000 in credit and $20,000 in debt. This would hurt your credit score since your cards would now be maxed out.

If you are trying to protect your credit score or rebuild it, canceling credit cards may be counterproductive. Additionally, applying for credit cards in order to transfer balances on existing ones could negatively impact your credit score. When creditors check your credit report, other creditors often assume it's because you need to borrow money or apply for additional credit to handle existing debt. As a result, your credit score could be reduced.