Credit scores are based on a variety of factors, including total debt, available credit, creditor payments and the length of a credit history. When a consumer takes an action to acquire or cancel credit, it will affect an overall credit score.
Credit History
If you cancel a credit card that you've had for a long time, it will likely lower your credit score, as your overall credit history will be shortened.
Credit Ratio
If you cancel a card with no balance, but maintain other credit cards with balances, it will change your balance-to-limit or credit utilization ratio. This will show that you have less available credit, but the same debt.
Types
A small part of credit scoring is based on a mix of credit types. If you cancel all of your credit cards and don't have any other lines of revolving credit, it will lower your credit score.
Time Frame
Canceling numerous credit cards within a short period may indicate financial problems to lenders.
Considerations
Canceling a credit card will not always lower a credit score. If you have a large number of credit cards, canceling the newest card with a low available balance may actually improve your score.
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